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ANNUAL REPORT ANDACCOUNTS 2023
ASHTEAD GROUP PLC
AMBITION
WITH
PURPOSE
ANNUAL REPORT ANDACCOUNTS 2023
1
4
2
53
EQUIPPED
FOR
SUCCESS
We are an international equipment rental company with national
networks in the US, Canada and the UK. We rent a broad range of
construction, industrial, general and specialty equipment across
a wide variety of applications to a diverse customer base.
Actionable components
Grow General Tool
and advance
our clusters
page 6
Dynamic capital
allocation
page 82
Advance
technology
page 46
Amplify Specialty
page 36
Lead with ESG
page 58
Our purpose
Cultural elements
To provide a reliable alternative to
ownership for ourcustomers across
a wide range of applications and markets
Investment in ourpeople
Foster culture of ‘entrepreneurialism with scale’
Continuously delivering on our customer promise
ofAvailability, Reliability and Ease
page 20
page 62
Ashtead Group plc Annual Report & Accounts 2023
51BN+
Btu/hr of heating delivered
2M+
Metres of barriers assembled
800,000+
Customers
1.96M+
Small tools rented
1M+
Rental assets
305M+
Miles travelled for delivery
and service
Throughout the Annual Report we refer
toanumber of alternative performance
measures, including measures such
asadjusted results, free cash flow and
constant currency growth. These are
defined in the Glossary of terms on
page174.
Forward looking statements
This report contains forward looking
statements. These have been made by
thedirectors in good faith using information
available up to the date on which they
approved this report. The directors can give
no assurance that these expectations will
prove to be correct. Due to the inherent
uncertainties, including both business and
economic risk factors underlying such
forward looking statements, actual results
may differ materially from those expressed
or implied by these forward looking
statements. Except as required by law or
regulation, the directors undertake no
obligation to update any forward looking
statements whether as a result of new
information, future events or otherwise.
STRATEGIC REPORT
2 Our Group at a glance
4 Chair’s letter
8 Strategic review
12 Our markets
20 Our business model
28 Our strategy
38 Key performance indicators
40 Principal risks and uncertainties
48 Stakeholder engagement
50 s172 statement
51 Financial review
60 Responsible business report
76 Task Force on Climate-related
Financial Disclosures
84 Non-financial andsustainability
informationstatement
DIRECTORS’ REPORT
86 Chair’s introduction
to Corporate governance
88 Our Board of directors
90 Corporate governance report
97 Audit Committee report
102 Nomination Committee report
103 Remuneration report
122 Other statutory disclosures
124 Statement of directors’
responsibilities
FINANCIAL STATEMENTS
126 Independent Auditor’s report
133 Consolidated income statement
133 Consolidated statement
ofcomprehensive income
134 Consolidated balance sheet
135 Consolidated statement
ofchanges in equity
136 Consolidated cash flow statement
137 Notes to the consolidated
financial statements
ADDITIONAL INFORMATION
173 Ten-year history
174 Glossary of terms
177 Financial calendar and advisers
Discover how we’ve
performed in the
Financial Review,
page 51
7,962
6,639
6,399
5,870
9,667
2023
2022
2021
2020
2019
1,824
1,316
1,343
1,448
2023
2022
2021
2020
2019
2,273
2,156
1,668
1,235
1,244
1,382
2023
2022
2021
2020
2019
Profit before
taxation ($m)
$2,156m
307.1
219.1
221.5
227.2
388.5
2023
2022
2021
2020
2019
Adjusted EPS (¢)
388.5¢
205.4
205.2
216.7
368.4
280.9
2023
2022
2021
2020
2019
EPS (¢)
368.4¢
Adjusted profit
before taxation ($m)
$2,273m
Revenue ($m)
$9,667m
Ashtead Group plc Annual Report & Accounts 2023
1
STRATEGIC REPORT
2022/23 HIGHLIGHTS
Financial highlights
1
2
3
8
4/5
6
7
1
2
6
5
3
4
US
An international
network of
equipment
solutions
andservices
Ashtead is an international
equipment rental company,
trading under the Sunbelt
Rentals brand, with national
networks in the US, Canada
and the UK .
We rent a broad range of
construction, industrial, general
and specialty equipment across
a wide variety of applications
to a diverse customer base.
The second largest equipment rental
company in the US with 1,094 stores
Revenue $8,222m
Return on investment
1
27%
Segment result $2,465m
Employees 18,981
Stores 1,094
Fleet size $13,407m
1 United Rentals ......................... 17%
2 Sunbelt .....................................13%
3 Herc Rentals .............................. 4%
4 Home Depot ...............................2%
5 H&E .............................................2%
6 Top 6–10 ...................................... 4%
7 Top 11–100 ................................ 21%
8 Others ......................................37%
1 Mobile elevating
work platforms ........................30%
2 Forklifts ....................................20%
3 Earth moving ...........................14%
4 Power and HVAC ..................... 11%
5 Scaffold ......................................2%
6 Other .........................................23%
1 Excluding goodwill and intangible assets.
2 Source: Management estimate based on S&P Global Market
Intelligence market estimates.
3 Source: Management information.
MARKET SHARE
2
FLEET COMPOSITION
3
1,094
STORES
Ashtead Group plc Annual Report & Accounts 2023
2
OUR GROUP AT A GLANCE
1
2
3
1
2
3
4
5
1
2
6
5
3
4
1
2
6
5
3
4
Revenue C$827m
Return on investment
1
18%
Segment result C$167m
Employees 2,094
Stores 119
Fleet size C$1,438m
Revenue £685m
Return on investment
1
9%
Segment result £65m
Employees 4,250
Stores 185
Fleet size £1,081m
CANADA UK
The second largest equipment rental
company in Canada with 119stores
The largest equipment rental company in the
UK with 185 stores
1 United Rentals .........................22%
2 Sunbelt .......................................9%
3 Others ...................................... 69%
1 Sunbelt .....................................13%
2 Speedy ........................................8%
3 HSS .............................................7%
4 VP ................................................ 6%
5 Others ...................................... 66%
1 Mobile elevating
work platforms ........................31%
2 Earth moving ...........................12%
3 Forklifts .................................... 11%
4 Power and HVAC .......................9%
5 Lighting, grip and lens ............22%
6 Other ......................................... 15%
1 Accommodation ......................16%
2 Earth moving ........................... 11%
3 Panels, fencing
and barriers .............................10%
4 Forklifts ...................................... 9%
5 Mobile elevating
work platforms ........................ 11%
6 Other ........................................ 43%
1 Excluding goodwill and intangible assets.
2 Source: Management estimate, excluding lighting, grip and lens,
basedonS&P Global Market Intelligence market estimates.
3 Source: Management information.
1 Excluding goodwill and intangible assets.
2 Source: Management estimate based on S&P Global Market Intelligence market
estimates – market share has been calculated excluding the impact of revenue
associated with supporting the Department of Health COVID-19 response.
3 Source: Management information.
MARKET SHARE
2
MARKET SHARE
2
FLEET COMPOSITION
3
FLEET COMPOSITION
3
119
STORES
185
STORES
Ashtead Group plc Annual Report & Accounts 2023
3
STRATEGIC REPORT
A YEAR OF DELIVERY
AND GROWTH
Dear Shareholder
I am pleased to report that we
have continued to see growth
inall our markets which has
produced another strong set
offinancial results.
Our ability to deliver this strong
performance is a result of the
successful execution of our Sunbelt 3.0
strategic plan and the dedication and
outstanding team members we have in
the business. It has been an incredibly
busy year! So, I would like to thank all
my colleagues for their commitment
and excellence in serving our
customers which has helped
producethese record results.
Strategic progress
In April 2021 we announced our Sunbelt
3.0 strategy which clearly described the
actionable components that would drive
further growth in our business. We are
now two-thirds of the way through this
plan and I am delighted to report that
we are ahead of where we expected to
be at this stage.
Major legislation passed by the US
government, which is referred to later
inthis report, has increased demand for
our fleet in end markets that are already
strong. We have been able to meet this
demand by working closely with our
suppliers to ensure that we have both
the size and breadth of fleet that can
meet our customer demands in what
are increasingly diverse end markets.
Our focus on the size and breadth of our
fleet is also critical as we continue to be
successful in our cross-sell strategy
between General Tool and our Specialty
businesses, a key part of the actionable
components of our 3.0 strategy.
To support this increased market
activity in North America, we have
opened 77 greenfield locations
duringthe year and added a further
88locations through 45 bolt-on
acquisitions. Since the year end, we
completed the acquisition of a leading
Power and HVAC business based in
Quebec, which expands our offerings
and capabilities in this Canadian
market where we are already an
established supplier.
Our construction end market is
becoming characterised increasingly by
larger projects. These include projects
such as electrical vehicle and battery
plants, LNG plants and semiconductor
facilities. We refer to these as ‘mega’
projects and we provide more
information about mega projects on
pages 26 to 27.
We are making excellent progress
inthe development of our industry-
leading technology platform which
willcontinue to enhance growth in the
business. Over the course of the next
six months, we will be releasing a
number of new applications, which will
enable us to deliver a more intuitive and
connected service to our customers, as
well as creating a number of efficiency
opportunities to support our
sustainability objectives. Our platform
has also been designed to ensure that
advances in AI can help further in our
customer insight as well as our
efficiency objectives.
A sustainable business model
Health and safety is the first priority
inall aspects of our day-to-day life at
Ashtead. The dedication of our team
members who deliver outstanding
service to our customers every day of
every week, do so while ensuring safety,
our leading value, is at the forefront of
all that they do. I would like to thank all
of our team members for their ongoing
commitment to safety in our business.
Our Engage for Life programme is a key
contributor in how we embed safety into
the daily lives of our team members and
PAUL WALKER
Chair
Ashtead Group plc Annual Report & Accounts 2023
4
CHAIR’S LETTER
so this year we launched Engage for
Life‘Amplified’, to help focus ongoing
improvement in our safety procedures.
Iam delighted to report that our incident
rate in North America remains the lowest
it has been in the Group’s history, and we
have made similar progress in the UK.
I am pleased that earlier this year we
published our first standalone
Sustainability report and I would
encourage shareholders to read this
report, which provides detailed insight into
the progress we are making. In particular,
the report describes the lead we have
taken in our industry to drive a number of
key environmental initiatives working with
both suppliers and customers to use our
existing fleet in more sustainable ways.
These initiatives are integral to our
longer-term priority to have the most
environmentally sustainable rental and
transportation fleet.
We continue to make very good progress
with our diversity, equality and inclusion
initiatives. Our women’s group, WISE
(Women: Inspired, Supported,
Empowered), was set up to support and
empower our female team members.
Thisgroup is having a significant impact on
our organisation, and I would like to thank
everyone who has dedicated their time to
making this a success. We have also
undertaken significant work this year to
expand our veteran recruitment, making it
more attractive for them to join and easier
for them to thrive once part of our team.
Financing
One of the five actionable components of
our strategic plan, Sunbelt 3.0, is dynamic
capital allocation. An integral part of this
is a strong balance sheet which provides
acompetitive position to take advantage
ofthe structural growth opportunities
evident in both existing and new markets
that we serve. During August 2022 and
January 2023 we accessed the bond
markets in order to strengthen further
ourbalance sheet and to ensure we have
financial flexibility to take advantage of
opportunities in the market. We issued
$750 million, 10-year, investment grade
notes in August and January at a coupon
rate of approximately 5.5%. Including
these $1.5 billion of bonds, our debt
facilities are committed for an average of
six years at a weighted average cost of 5%.
We continue to operate at the lower end
ofour target leverage range of 1.5 to 2.0
times net debt to EBITDA and we will
continue to deploy capital in accordance
with our capital allocation policy.
Dividends
We continue to have a progressive
dividend policy which is designed to
ensure sustainability through the
economic cycle. Our current profit and
cash generation are also factors that
theBoard consider when recommending
the final dividend.
The Board have noted the Group’s outlook
and financial position as well as other
stakeholders’ interests and I am pleased
to report that we are recommending a
final dividend of 85.0¢ making 100.0¢ for
the full year. The final dividend will be paid,
ifapproved at the AGM, on 12 September
2023 to shareholders on the register on
11August 2023.
Outlook
Our business continues to perform well
benefitting from strong customer demand
in our end markets. The continuing
enhancements to our operational flexibility
and significant investment in our fleet will
ensure that we can capitalise on these
growing and diverse end markets.
We have a strong balance sheet, a
well-defined and proven go to market
strategy, and an outstanding workforce.
This positions us well for future growth.
PAUL WALKER
Chair, 12 June 2023
Highlights of the year
+24%
Revenue up 24%
1
,
rental revenue up 22%
1
$1.1bn
$1,146m spent on bolt-on acquisitions
(2022: $1,274m) and 77greenfield
locations opened in North America
$2,522m
Group operating profit of
$2,522m (2022: $1,948m)
$3.8bn
$3,772m of capital invested in
the business (2022: $2,397m)
$2,273m
Group adjusted pre-tax profit
of $2,273m (2022: $1,824m),
an increase of 26%
1
$531m
$531m of free cash flow
generation
(2022: $1,125m)
388.5¢
Adjusted earnings per share
of 388.5¢ (2022: 307.1¢)
1.6x
Net debt to EBITDA leverage
1,2
of1.6times (2022: 1.5 times)
368.4¢
Earnings per share of 368.4¢
(2022: 280.9¢)
85.0¢
Proposed final dividend of
85.0¢, making 100.0¢ for the
full year (2022:80.0¢)
$1,618m
Post-tax profit of $1,618m
(2022: $1,251m)
1 At constant exchange rates.
2
Excluding the impact of IFRS 16.
Ashtead Group plc Annual Report & Accounts 2023
5
STRATEGIC REPORT
GROW
GENERAL
TOOL
AND ADVANCE
OUR CLUSTERS
1
Advance our clustered market approach
through a proven playbook to meet demand
and enable increased rental penetration in
North America while optimising our
operational network in the UK.
16 General Tool greenfield
locations added in North
America in 2022/23
37 General Tool acquisitions
completed in North America
adding a further 61 locations
2023 highlights
47
of top 100 markets
clustered in the US
+22%
growth in North American
General Tool revenue
in 2022/23
Ashtead Group plc Annual Report & Accounts 2023
6
We have achieved cluster
status in an additional eight
of the top 100 US markets
this year, giving us 47 of our
Sunbelt 3.0 strategic plan
target of 49.”
Sunbelt 3.0 in action
We continue to expand our General Tool businesses,
often sitting alongside complementary Specialty
business lines, and building out our strategy of
clustering stores. This strategy enables us to best
serve our customers with the widest selection of
equipment in close proximity.
We have achieved cluster status in an additional
eightof the top 100 US markets this year, giving us
47of our Sunbelt 3.0 strategic plan target of 49. We
are now in all US states except for Wyoming. We have
also continued to build our clusters in the Canadian
market where we now have clustered five of the top 10
markets, 13 in total and are present in eight provinces.
7
Ashtead Group plc Annual Report & Accounts 2023
STRATEGIC REPORT
STRATEGIC REVIEW
AMBITION
WITH
PURPOSE
We are delighted to report another year of
excellent results, continued growth and
ongoing momentum. Our markets are
strong and full of opportunity. We have
benefitted from additional clarity around
the strength of our end markets, which
makes us ever more confident of our ability
to generate excellent results in the short
and medium term. ESG (Environmental,
Social and Governance) is being embedded
more and more into the business and we
continue to improve our health and safety
record across all our territories. Ambition
with purpose remains the cornerstone of
what we do.
We continued to advance our Sunbelt 3.0
strategic growth plan and are ahead of
schedule. We did this by executing on all
our capital allocation priorities, which
fuelled our existing locations and
greenfield additions with new rental
fleetand delivery vehicles. We added 165
locations in North America during the
year,77 by way of greenfield openings
complemented by 88 locations from
bolt-on acquisitions. Our additional
locations combined to provide a good mix
of Specialty and General Tool locations,
further advancing our clustered market
progress. We achieved cluster status in an
additional eight of the top 100 US markets,
giving us 47 of our Sunbelt 3.0 target of 49.
We are now in all US states except
Wyoming and we operate in eight Canadian
provinces. This is great progress,
particularly when we look to the future, as
these new locations will mature into larger
contributors in terms of revenue and
profits, creating more outlets to deliver the
excellent service to our customers, for
which we are so well known.
What we call a ‘trifecta’ of market
dynamics – supply constraints, inflation,
and skilled trade scarcity – is increasing
our competitive advantage rather than
limiting us. These ongoing issues come
with operational challenges but those are
outweighed by the corresponding benefits
to our business, and they favour the larger
rental players such as Sunbelt. We are
seeing an increased rental penetration
andare taking considerable market share
because we possess the scale, experience,
equipment purchasing influence and
financial strength needed to prosper in this
market environment. Those companies
benefitting from the continued structural
change are the very few, larger, more
experienced, more capable rental
companies who can position themselves
tobe there for this increasing customer
demand, thereby realising a larger share
of what is without question a larger and
growing market. Our business is
positioned to win in this environment.
BRENDAN HORGAN
Chief executive
MICHAEL PRATT
Chief financial officer
Ashtead Group plc Annual Report & Accounts 2023
8
We are also benefitting from the
significant increase in US federal spending
as a result of the three legislative Acts
passed recently. We look at these in more
detail in our markets section. The greater
visibility we have over our end markets
comes in part from this recent legislation.
Some c. $2bn has been committed to
investment as a result of this legislation.
The opportunities inherent in these Acts
add to what is already a strong level of
endmarket activity. The growing mega
project landscape, together with the
smallto mid-sized projects and the
maintenance, repair and operations of
thegeographical markets we serve,
present ever greater opportunities.
What we refer to as mega projects are
anincreasingly important aspect of our
business. These are large-scale, over
$400 million, multiyear projects that give
us greater long-term visibility over income
streams. They are increasingly an
important part of our strategy enabling
usto plan and forecast long into the
future. These projects are of 3+ years
duration. Find out more about what we
call mega projects on pages 26 to 27.
We continue to see good performance
across all parts of the business. All our
Specialty businesses performed well
through every geographic region. This
continues to demonstrate tangibly the
structural shift our customers are making
from ownership to rental as we provide
atrusted and reliable alternative to
ownership. Further, our Specialty
business lines service principally
non-construction markets and therefore
act as a good proxy for the strength of this
incredibly large end market. Our balance
sheet remains strong, giving us a
competitive advantage and positioning us
well to take advantage of these structural
changes that continue to drive our market.
DELIVERING
TODAY
ADJUSTED EARNINGS PER SHARE
388.5¢
GROUP OPERATING PROFIT
$2,522M
Ashtead Group plc Annual Report & Accounts 2023
9
STRATEGIC REPORT
DELIVERING FOR
CUSTOMERS
The US and Canada saw strong growth,
and UK rental revenue grew despite the
end of our COVID work for the Department
of Health. Group rental revenue increased
22% on a constant currency basis. This
growth was delivered with strong margins
including an EBITDA margin of 46% and
anoperating profit margin of 27%. As a
result, adjusted pre-tax profit increased
26% to $2,273m and adjusted earnings
pershare were $388.5¢ for the year.
US rental revenues were particularly
strong, 24% ahead of last year at $7,503m.
This was driven by the combination of
volume and rate improvements in what
continues to be a favourable demand and
supply environment. We are operating in
ahigh inflation environment but strong
activity and favourable rates have enabled
us to pass through the inflation we have
seen in our cost base, both in general
andas direct costs related to ancillary
revenues, such as fuel, transportation
anderection and dismantling, which are
growing at higher rates than pure rental.
We have continued to progress rental
rates and we expect there will be ongoing
industry rate progression during 2023/24.
In Canada, rental revenue was 22% higher
than a year ago at C$696m. The original
Canadian business goes from strength
tostrength, taking advantage of its
increasing scale and breadth of product
offering, as we expand our Specialty
businesses and build out our clusters in
that market. The level of bolt-on activity,
particularly the MacFarlands and Flagro
acquisitions, which have a higher
proportion of lower margin sales revenue,
has been a drag on margins. This will
decrease in the future as we align these
businesses. Our lighting, grip and lens
business has recovered from the market
disruption seen in the earlier part of the
year, although it is now being impacted by
the Writers Guild of America strike.
UK rental revenue was 3% higher than a
year ago at £559m. This growth is despite
the significant reduction in work for the
Department of Health as we completed
the demobilisation of the COVID testing
sites during the first quarter. As a result,
the Department of Health accounted for
only 4% of total revenue for the year
compared with 30% last year. The core
business continues to perform well.
However, the inflationary environment,
combined with completing the testing site
demobilisation within three months, then
getting that large volume of returning
fleetback out on rent, and the significant
increase in demand over the summer,
particularly in the returning events
market, contributed to some operational
inefficiencies, which impacted margins.
There is real momentum in the UK
business now as it makes increasing
progress in markets such as facility
maintenance and further develops its
specialty offering in areas such as power
and the new lighting and grip business.
Allthese emphasise the cross-selling
capabilities in the UK through our
unmatched product and services portfolio.
As we enter the final year of Sunbelt 3.0,
we are looking forward to Sunbelt 4.0,
which we will launch in April 2024. This
will build on the significant progress
wehave made during Sunbelt 3.0 and
leverage our increased scale and
advanced technology platform to drive
growth and returns and strengthen
ourbusiness for years to come.
CUSTOMERS SUPPORTED
800,000+
RENTAL ASSETS
1M+
Ashtead Group plc Annual Report & Accounts 2023
10
Strategic review continued
DELIVERING
ON SUNBELT 3.0
TOP 100 US MARKETS CLUSTERED
47
NEW LOCATIONS ADDED IN 2023 IN NORTH AMERICA
165
IN THE STRATEGIC REPORT
Capitalising on market opportunities
We are building market share through
same-store growth, new greenfield
investments, select bolt-on acquisitions
and the expansion of our product offering.
Page 12
Implementing our strategy
We focus on building market share,
maintaining flexibility in our operations
andfinances, and delivering Availability,
Reliability and Ease to our customer base.
Page 28
Measuring our performance
We had a year of strong market
outperformance across the business,
delivering for all our stakeholders.
Page 38
Creating sustainable value
Our equipment rental business model,
andthemanagement of that over the economic
cycle,enable us to create long-term
sustainable value.
Page 20
Managing our risks
Our main risks relate to economic conditions,
competition, cyber-security, health and safety,
peopleand culture, theenvironment and laws
andregulations.
Page 40
Being a responsible business
We report on responsible business throughthe Group
Risk Committee. Wefocus on health and safety, our
people,the environment, including climatechange,
community investment and ensuring the highest
ethical standardsacross the Group.
Page 60
Ashtead Group plc Annual Report & Accounts 2023
11
STRATEGIC REPORT
Our markets are always evolving and
ourstrategic plan, Sunbelt 3.0, now into its
final year, has taken us into more markets,
both by geography and function.
Construction will likely always be our
largest market in terms of the equipment
required, but we continue to see expansion
of our non-construction business
especially through the rapid growth of our
Specialty businesses. The US continues to
be our largest market with strong
performance and we see good growth in
our newest market, Canada. In the UK,
rental revenue grew, though at a slower
pace than North America, in what is a
relatively more mature rental market. We
continue to take market share and exploit
opportunities in new business areas as
well as working to improve the market
efficiency of our operations.
We continue to see expansion of our
non-construction business especially through
the rapid growth of our Specialty businesses.”
Ashtead Group plc Annual Report & Accounts 2023
12
OUR MARKETS
− Airports
− Highways and
bridges
− Office
buildings
− Data centres
− Schools and
universities
− Shopping
centres
− Residential
− Remodelling
− Manufacturing
plants
− Green energy
CONSTRUCTION
− Fire
− Hurricanes
− Flooding
− Tornadoes
− Winter storms
− Residential
emergencies
− Health
emergencies
− Alternative
care facilities
− Points of
distribution
− Mobile testing
facilities
RESPONSE
− Office
complexes
− Apartment
complexes
− Government
− Hospitals
− Data centres
− Parks and
recreation
departments
− Schools and
universities
− Shopping
centres
− Pavement/
kerb repairs
− Golf course
maintenance
− Industrial
FACILITIES MAINTENANCE
AND MUNICIPALITIES
− National
events
− Concerts
− Sporting
events
− Film and
television
production
− Theme parks
− Festivals
− Farmers’
markets
− Local 5K runs
− Cycle races
ENTERTAINMENT AND
SPECIAL EVENTS
The US rental market is nine times bigger
than the UK and we continue to capitalise
on the structural changes in that market,
as customers continue to adapt to renting
equipment rather than owning it.
Our Canadian business is growing rapidly
and we are excited by the opportunities we
see there. We expect the Canadian market
to develop in a manner similar to the US,
as we build brand awareness and
customers get more accustomed to
renting a wider range of equipment and
become more familiar with the quality of
service we deliver. Our aim is to grow the
business wherever we are in the economic
cycle and no matter what circumstances
we face.
The breadth of our markets
Our markets continue to expand, in terms
of geography, range of equipment rented
and the applications for which our
equipment is used. Our end markets are
increasingly diverse with significant
cross-selling between General Tool and
Specialty. The graphic opposite shows
thediversity of end markets that use our
equipment. In many cases, this is the
same equipment just used for a different
purpose. A significant proportion of our
fleet was developed originally for the
construction industry but is now used
inapplications varying from film and
television production to home decor.
Ourcustomers are equally diverse from
multi-national organisations to DIYers.
Weare reaching these broadening
markets as a result of our scale,
advancement of our market cluster
strategy and Specialty business evolution
– all positioned to give great service to our
customers through Availability, Reliability
and Ease. For any of these markets, there
is also a wide range of equipment used.
Equipment that previously would not have
been rented is now part of the rental mix.
This is particularly the case with the
continuing structural change most
noticeable in the US and Canada.
Construction remains a core part of our
end markets but we see plenty of growth
opportunity for our General Tool and
Specialty businesses in areas such as live
events, building maintenance, municipal
activities and emergency response. We
commonly refer to these end markets,
andmany more, as MRO or, the ongoing
maintenance, repair and operations of
thegeographic markets we serve. These
incredibly large addressable markets
make up the majority of our Specialty
revenues and they also benefit our General
Tool business through cross-selling.
A big change in recent years has been the
increase in rentals taking place in ordinary
square footage under roof applications
and we expect this trend to continue.
Increasingly we are seeing bigger, longer
construction projects, often over several
years. We now refer internally to projects
worth over $400m as mega projects (see
pages 26 to 27). There are also three US
legislative Acts that are fuelling growth
which we discuss on page 17. In addition,
we are designated an essential service in
theUS, UK and Canada in times of need,
supporting government and the private
sector in response to emergencies,
including hurricanes, tornadoes and,
untilrecently, the pandemic.
The length of time that customers rent
equipment is also increasing. Not only are
large projects lasting longer, but rental is
now essential to these rather than being
more ‘top up’ in nature, as it used to be.
We are also seeing customers renting
equipment longer to move to the next job
or project.
Ashtead Group plc Annual Report & Accounts 2023
13
STRATEGIC REPORT
Dodge Construction Starts show strength
and growth. The non-residential and
non-building components of the
construction end market are proving to be
incredibly strong and forecasts show that
continuing. A non-residential slowdown
inthe pandemic was softened by strength
in residential construction, but this has
bounced back and we saw a strong
uptickin starts in 2022/23. This is not
aresidential uptick as experienced in
2020/21, but the early wave of new project
starts derived from a combination of
private investment and legislative led
federal project funding and incentives.
A large number of new projects have
recently begun and many more are in
planning. We believe the forecasts for
theheart of our construction end market,
specifically non-residential and non-
building, combined with strength over the
last several quarters and the recent spike
in starts, together translate into consistent
growth in activity levels for the next
several years.
It has long been the case that the
residential and non-residential markets
are closely linked. However, that is not the
position today. It is increasingly clear there
is far less correlation between residential
and non-residential construction in this
era of what we call mega projects (see
pages 26 to 27) and the larger than ever
before seen federally funded initiatives.
Understanding the dynamics of supply
constraints, inflation and skilled trade
scarcity as it relates to our end markets
and our business is important to
understanding our growth. We now know
that these three important factors have
proved not to be transitory. We believe that
inflation should moderate in the not-too-
distant future, but that supply constraints
and skilled trade scarcity will continue. We
believe that for many in our industry there
will be several quarters ahead of tough
access to the supply of new rental assets
and the associated parts. We also believe
this collection of factors will prevent our
industry building up too much fleet, which
has been a concern expressed by some.
We do not expect to see much easing in the
scarcity of skilled trade workers given that,
in general, more are retiring than joining
the workforce each year.
US
THE US
Ashtead Group plc Annual Report & Accounts 2023
14
Our markets continued
THE US
Source: S&P Global Market Intelligence
(May 2023).
01 US market outlook
Industry rental revenue
2023
+8%
2024
+3%
2025
+3%
02 Construction activity by cycle
T
T+2
T+4
T+6
T+8
T+10
T+12
T+14
T+16
T+18
T+20
70
90
110
130
150
170
190
1975–1982
1982–1991
1991–2011
2011–2020
Forecast
(T=100 based on
constant dollars)
The tailwind effect these factors have
hadin the recent past, which will
continuein the near term, and how they
drive structural change should not be
underestimated. This structural change
will benefit the larger, more capable
companies in our industry such
asourselves.
The markets we serve remain strong,
asboth structural and cyclical trends are
favourable. Chart 02 shows the last four
construction cycles. These have followed
one of two patterns. From 1975 to 1982
and from 1982 to 1991 the initial recovery
was very aggressive but the overall cycle
was relatively short. In contrast from 1991
to 2011, and 2011 to 2020, the cycle was
characterised by a more gradual recovery
over a longer period of time. The initial
forecasts for the next cycle are more
similar to the last two cycles. However,
while these forecasts are for growth
through 2027, there could be bumps on
theway due to inflation, the interest rate
environment and other broader macro-
economic conditions. However, our
business model is well equipped to deal
with this environment as we are able to
reduce our capital expenditure and
generate significant free cash flow. In the
event of a slowing economy, the impact
will be mitigated to a degree by the
opportunity from the structural shift from
ownership to rental and our ability to
increase market share.
Source: Dodge Data & Analytics (May 2023)
Ashtead Group plc Annual Report & Accounts 2023
15
STRATEGIC REPORT
Market share in the US
We continue to grow our market share in
the US and even though we are the second
largest equipment rental company, there
remains plenty of room to grow as Chart
03 shows. Our major competitors are
United Rentals and Herc Rentals with
17%and 4% respectively. Home Depot,
and H&E have shares of c. 2%. Most of
theremainder of the market is made up
ofsmall local independent rental shops.
Much of our market share gain comes
from these small independents when we
set up new stores or acquire them. Ours
isa capital-intensive industry where size
matters. Scale brings cost benefits and
sophistication in areas like technology and
other services, and this leads ultimately
tofurther consolidation. The proportion
ofthe market enjoyed by the larger
players continues to increase and we have
clearly been a major beneficiary of this
trend. While there will always be a place
for strong local players, the market share
enjoyed by the larger players is likely to
continue to grow as the big get bigger.
This market share analysis is based on
thetraditional definition of the rental
market focused on construction.
However,a significant market for us is
facility maintenance, repair and operation
of the geographic markets we serve
characterised by square footage under
roof. In the US there are 100bn square feet
under roof and we believe this represents
a potential rental market of $7-10bn, with
minimal rental penetration currently.
Webelieve the size of the rental market is
understated and hence our, and everyone
else’s, market share is overstated. This
only serves to increase the opportunities
for growth.
We are confident that as the market
grows, our share will also increase. We
continue to set ambitious targets with our
long-term market share target of 20%.
The speed at which we increase our
market share is in part a function of how
quickly we can get new locations up and
running. However, as noted above, our
market share growth also comes from
continuing to broaden both our end
markets and the range of equipment we
have available to rent in each location
(more on this in our strategy section on
page 28).
The combination of our business model,
which you can read more about on page
20, the continued attractiveness of our
markets and the long-term trend to rental,
provides the perfect environment for us to
achieve our goals. In addition, our market
share gains accelerate as we make the
most of our scale advantages.
As we increase our market share and grow
our Specialty businesses, they become a
greater proportion of the business mix
across the cycle and accounted for c. 30%
of revenue in 2022/23. The acquisitions
wemake are often to expand into a new
specialty area or to develop an existing
oneand then we supplement them with
greenfield openings.
The trend to rental
Rental penetration continues to deepen
and those benefitting from this increased
rental penetration are the larger, more
experienced, more capable rental
companies who can position themselves
to be there for this increasing customer
base and capitalise on this larger market.
Rental still only makes up around 55% of
the US market compared to around 75%
inthe UK. However, this is a broad average
with penetration levels ranging from low
single-digit percentages for, say, floor
scrubbers to 90%+ for large aerial
equipment. We like specialty products
because they are at the low end of this
range, which provides greater scope for
growth. We see the potential market
penetration for rental equipment to be
wellover 60% in the US.
03 US market share
1
2
3
8
4/5
6
7
1 United Rentals .................................17%
2 Sunbelt ............................................ 13%
3 Herc Rentals ......................................4%
4 Home Depot ...................................... 2%
5 H&E .................................................... 2%
6 Top 6–10 ..............................................4%
7 Top 11–100 ........................................21%
8 Others ............................................. 37%
Source: Management estimate based on S&P
Global Market Intelligence market estimates.
Target
20%
13%
5%
4%
2%
2
022
2
013
2
007
2002
Source: Management estimates.
04 US market share development
Ashtead Group plc Annual Report & Accounts 2023
16
Our markets continued
The drivers of this evolution include
significant cost inflation in recent years
associated with the replacement of
equipment, technical changes to
equipment requirements and health,
safety and environmental issues which
make rental more economical and just
easier. Environmental regulations have
driven further rental penetration through
the reduction in fleet size by those
customers who previously may have
chosen to own some if not all of their
larger equipment needs. Customers and
smaller competitors with older fleets
arefaced with heavier replacement spend
causing them to replace less and rent or,
in the case of smaller competitors,
reducetheir fleet size. Furthermore,
thedifficulties of getting to grips with
newtechnology and maintenance
requirements have also caused more
operators to decide to rent. Maintaining
optimally serviced and therefore safe
equipment can be a big outlay for a
smaller operator. The diversity of our fleet
helps us take advantage of this increasing
trend to rental and we continue to expand
the range of products we rent.
Our development and use of technology
isalso driving rental penetration.
Ourhighly sophisticated proprietary
customermanagement, inventory and
delivery tracking systems all contribute
tothis trend.
Legislation
There have been three major legislative
Acts in the US that are beginning to
drive increased demand in an overall
market which is already very active.
The Infrastructure Investment and
Jobs Act has a headline figure of $1.2
trillion with $650bn allocated to
renewing ‘ordinary’ run-rate federal
investment in roads, bridges, rail,
utility, etc. This Act not only supports
the baseline investment but also the
delivery of an incremental $550bn in
new project spending throughout the
US. Over 10,000 programmes and
projects have already been identified
ranging from $100,000 to $3bn. Despite
the fact that this Act was signed into
law in November 2021, very little has
yet to translate into actual project
starts. However, this is now beginning
and will go into full effect with starts
largely commencing between 2023
and2025.
Second is the Chips and Science Act,
putting in motion a revitalisation of
USdomestic semiconductor
manufacturing. The overall Act will
invest $250bn to progress American
semiconductor research,
development, and manufacturing
andis designed to support directly
orthrough tax credits, nearly $140bn
in new semiconductor manufacturing
projects. A number of projects have
already begun, even before passage
ofthe Act, indicating what we conclude
is the beginning of a new era ofmega
projects (see pages 26 to 27) coming
tofruition. Individual semiconductor
buildings are underway with more
already announced, with price tags
aslarge as $10bn per project. These
projects, which will take 3+ years to
complete, will consume an enormous
amount of rental fleet and require
highlysophisticated rental company
capabilities. We expect semiconductor
manufacturing to be as important for
us in the future as data centres have
been for well over a decade now.
Finally, the Inflation Reduction Act,
willprovide $370bn to fund directly
orby way of tax credits, a broad
basketof energy production and
manufacturing, ranging from solar
field construction which will triple the
current US capacity by 2030, to battery
factories, towind farms, to EV (electric
vehicle) production.
Ashtead Group plc Annual Report & Accounts 2023
17
STRATEGIC REPORT
CANADA
Canada remains a relatively new and
growing market for us. The overall rental
market is less than a tenth of the size of
the US. But in the same way that the US
has experienced structural growth as
more and more types of equipment are
rented for different applications, we
expect similar trends in Canada. Our
share of the Canadian rental market is
around 9%. There is plenty of scope to
develop this in the same way as in the US
and we are growing rapidly. We are seeing
continued market growth in 2023 and S&P
Global Market Intelligence predicts
Canadian rental revenue to grow 3% in
2023, 4% in 2024 and 6% in 2025. We
anticipate growing more rapidly as we take
market share and broaden our offering.
Our original Canadian business goes from
strength to strength as it takes advantage
of its increasing scale and breadth of
product offering as we expand our
Specialty businesses and look to build
outour clusters in that market. Our
lighting, grip and lens business continues
to encounter a degree of market disruption
with the threat early last year of strike
action in the Vancouver market
resultingin productions being delayed
ortransferred elsewhere. It is now
navigating the impact from the
WritersGuild of America strike.
We have grown to 119 locations across
Canada. Key of course to delivering on our
mantra of Availability, Reliability and Ease
is convenience, proximity and diversity in
our offering. We have a significant
presence in Ontario and have expanded
inEdmonton, Calgary, Winnipeg and, with
the Modu-Loc acquisition, we entered
Quebec. Beginning with a complement
ofGeneral Tool businesses and adding
Specialty into the mix to introduce
cross-selling, our runway for growth
inCanada remains long.
The rental market has, historically,
beenconstruction focused, but we
continue to develop new markets such
asthe film industry in Vancouver and
Toronto through our lighting, grip and
lensbusiness, William F White (WFW).
TheWFW business also provides a
platform to expand our lighting, grip and
lens Specialty into the US and UK markets.
In addition, we have continued to expand
our power and flooring solutions Specialty
businesses in Canada. Customers who
traditionally rented mainly mobile
elevating work platforms (‘MEWPs’) are
now renting smaller equipment as well.
They are increasingly seeing the benefits
of working with us to fulfil the full range
oftheir equipment needs. Our cluster
approach (more on this in our section on
strategy on page 31) also means we are
able to be closer to our customers than
has previously been the case.
Across the country there are variances
inthe mix of fleet we have on rent. In
Western Canada we see more customer
demand for MEWPs especially through
our work servicing the film and television
industry. We see great opportunities for
expanding our Specialty and MEWP
businesses, especially in Ontario, aided by
the growth of our lighting, grip and lens
business. As we expand in other provinces
we expect to generate more business
from Canada’s resources industry.
Over time we would expect our Canadian
market share to be similar to that in the US.
05 Canadian market share
1 United Rentals .................................22%
2 Sunbelt ...............................................9%
3 Others .............................................. 69%
1
2
3
Source: Management estimate, excluding
lighting, grip and lens based on S&P Global
Market Intelligence market estimates.
CANADA
Ashtead Group plc Annual Report & Accounts 2023
18
Our markets continued
Our UK business continues to grow despite
the lost rental revenue associated with the
Department of Health testing sites that
was a substantial part of our revenues in
the previous two years. This is no small
accomplishment, signalling a combination
of market share gains and a reassuring
level of end market activity, particularly
ininfrastructure and industrial projects
aswell as increasing progress into areas
such as facility maintenance being
broughtabout by our unique cross-selling
capabilities across our unmatched
productand services portfolio.
Live events have been an ongoing
contributor in this post-pandemic period
which were, of course, virtually non-
existent throughout 2020 and 2021.
Theteam was incredibly proud to provide
our products and services to assist with
Queen Elizabeth II’s platinum jubilee and
state funeral.
A consistent area of focus to improve our
UK business has been on advancing rental
rates and the associated fees we charge to
provide services to our customers.
Although progress has been made, there
is still work to be done in this area. This is
something the UK rental industry falls
behind in and our position will be steadfast
in making a demonstrable change in the
face of the notable inflation our business
and the industry as a whole has absorbed.
We continue to see significant
opportunities in both construction and
non-construction markets in the UK as
inthe US and Canada. We will continue
toinvest responsibly in the UK market as
we seek to increase market share and
enhance returns.
Market share
We continue to be the largest equipment
rental company in the UK. There are a
greater number of major players in the
UKmarket and, as the largest, we have
a13% market share.
Chart 06 shows our key competitors and
their share of the market. We believe we
continue to be well-positioned in the
market with our strong customer service,
broad based fleet and strong balance
sheet. We have enhanced this market
position through simplifying our go-to-
market message and leveraging the
cross-selling opportunities provided by
our broad product offering and Specialty
businesses, a key element of our strategic
plan, Sunbelt 3.0.
UK
06 UK market share
1 Sunbelt .............................................13%
2 Speedy ................................................8%
3 HSS .....................................................7%
4 VP ........................................................ 6%
5 Others .............................................. 66%
Source: Management estimate based on S&P
Global Market Intelligence market estimates –
market share has been calculated excluding the
impact of revenue associated with supporting
the Department of Health COVID-19 response.
1
2
3
4
5
07 UK construction industry forecasts
(£ million)
2021
Actual
2022
Actual
2023
Estimate
2024
Forecast
%
of total
Residential 62,566 69,512 59,992 61,869 36%
11% -14% -3%
Private commercial 41,232 44,915 43,707 43,219 25%
9% -3% -1%
Public and infrastructure 66,814 66,819 65,951 66,369 39%
– % -1% 1%
Total 170,612 181,246 169,650 171,457 100%
6% -6% 1%
Source: Construction Products Association (Spring 2023).
THE UK
Ashtead Group plc Annual Report & Accounts 2023
19
STRATEGIC REPORT
CREATING SUSTAINABLE
VALUE ACROSS THE
ECONOMIC CYCLE
We create value through the short-term rental of equipment that is used for a wide variety of applications and the
provision of services and solutions to a diverse customer base through a broad platform across the US, Canada
and the UK. Our rental fleet ranges from small hand-held tools to the largest construction equipment.
Powering the platform Managing through the cycle
A
V
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DIFFERENTIATING
OUR FLEET AND
SERVICE
ENSURING
OPERATIONAL
EXCELLENCE
INVESTING IN
OUR PEOPLE
MAXIMISING
OUR RETURN ON
INVESTMENT
1 2
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N
What we do How we do it
Creating sustainable value across the economic cycle
We have a platform
which enables our
customers to rent
what they want, when
they want and where
they want with ease.
BUY
We buy a broad
range of equipment
from leading
manufacturers.
RENT
We rent it on a
short-term basis
to a broad range
of customers.
SELL
We sell the older
equipment in the
second-hand
market.
Ashtead Group plc Annual Report & Accounts 2023
20
OUR BUSINESS MODEL
How we share value with our stakeholders:
OUR PEOPLE
Investing in our people to provide opportunity
for development and to ensure we take the
very best care of our people.
See more on page 25
OUR CUSTOMERS
The provision of cost-effective rental
solutions to a diverse customer base.
See more on page 22
OUR SUPPLIERS
Developing long-term relationships
withsuppliers.
See more on page 49
OUR COMMUNITIES
Enhancing the communities in which we
operate, through employment, opportunity
and community involvement.
See more on page 49
OUR INVESTORS
Generating sustainable returns for
shareholders through the cycle.
See more on page 23
OUR ENVIRONMENT
Working to ensure we provide
environmentally friendly solutions.
See more on page 60
Creating value
1 2
DIFFERENTIATING OUR
FLEET AND SERVICE
− Broad fleet mix
− Evolution of Specialty
businesses
− Broad range of
customers
andapplications
− Scale to meet size and
range ofrequirement
ENSURING OPERATIONAL
EXCELLENCE
− Culture of health
andsafety
− Focused, service-driven
approach
− Long-term partnerships
with leading equipment
suppliers
− Industry-leading
application of technology
See more on page 24 See more on page 24
3 4
INVESTING
IN OUR PEOPLE
− Highly skilled team
− Devolved structure
− Maintaining significant
staff continuity
− Strong focus on
recruitment, training and
incentive plans
MAXIMISING OUR
RETURN ON INVESTMENT
− Effective fleet
management
− Optimisation of utilisation
ratesand returns
− Flexibility in local pricing
structures
− Focus on higher-return
equipment
See more on page 25 See more on page 24
Ashtead Group plc Annual Report & Accounts 2023
21
STRATEGIC REPORT
DIVERSE MARKETS AND APPLICATIONS
Our range of construction, industrial and general equipment is applicable to broad and diverse end markets, with individual
products having many different applications. As such, our equipment serves the needs of customers from construction to zoos
and from data centres to community events. c. 60% of our revenue comes from non-construction markets.
Renting generators,
access equipment,
barriers and trackway
for a stadium concert
Healthcare
– Indoor Air
Quality, facility
maintenance,
advanced
climate control
applications
Providing
temporary climate
control solutions
for retail premises
and office buildings
Airports – Tarmac/runway
resurfacing, construction/
remodelling of terminals,
facility maintenance, floor
care maintenance
Drying out and
cleaning up
after a flash
flood at an
industrial
warehouse
Managing the
flow at a water
treatment plant
to enable the
refurbishment
of ageing
infrastructure
WHAT WE DO
IS SIMPLE.
HOW WE DO
IT IS NOT.
Ashtead Group plc Annual Report & Accounts 2023
22
Our business model continued
At its most basic, our model is simple – we
purchase an asset, we rent it to customers
through our platform and generate a
revenue stream each year we own it (on
average, seven years) and then we sell it in
the second-hand market and receive a
proportion of the original purchase price in
disposal proceeds. Assuming we purchase
an asset for $100, generate revenue of $60
each year (equivalent to 60% dollar
utilisation) and receive 35% of the original
purchase price as disposal proceeds, we
generate a return of $455 on an initial outlay
of $100 over a seven year useful life.
We incur costs in providing this service,
principally employee, maintenance,
propertyand transportation costs and fleet
depreciation. However, this simple overview
encompasses a significant number of
moving parts, activities and expertise that
powers the platform to ensure Availability,
Reliability and Ease for our customers. Our
ability to excel in these areas enables us to
provide a rewarding career for our team
members, generate strong margins and
deliver long-term, sustainable shareholder
value, while managing the risks inherent in
our business (refer to pages 40 to 45).
Managing the cycle
We describe ourselves as being a late cycle
business in that our biggest end market,
non-residential construction, is usually
oneof the last parts of the economy to be
affected by a change in economic conditions.
This means that we usually have a good
degree of visibility on when we are likely
tobe affected, as the signs will have been
visible in other parts of the economy for
some time. When we expect a slow-down
inconstruction markets, we are able to plan
accordingly, react in a timely manner and
lower levels of capital expenditure. This
thenensures we are better positioned and
potentially stronger than our competitors to
take advantage of market changes once we
are out the other side. See content on our
strategy on page 28.
Designing,
erecting
anddismantling
scaffolding
systems
Designing bespoke
liftingsolutions for
the construction of a
new bridge
Providing equipment
for facilities
management at a
shopping complex
Data centres –
Power generation,
load banks,
temporary HVAC
solutions, access,
environmentally
friendly focused
solutions
Providing traffic
management solutions
forengineering projects
On-site tool hire,
accommodation and
maintenance for a
new residential
construction site
Facilitating fit-out
and ongoing
maintenance at
apower plant
Ashtead Group plc Annual Report & Accounts 2023
23
STRATEGIC REPORT
Differentiating our fleet
andservice
The differentiation in our fleet and service
means that we provide equipment to many
different sectors. Construction continues
tobe our largest market but now represents
around 40% of our business in the US as we
have deliberately reduced our reliance in
this area through broadening our product
offering and customer base. We continue to
develop our specialty areas, such as Power
and HVAC, Climate Control and Air Quality,
Scaffold Services, Trench Safety and
Flooring Solutions, which represent c. 30%
of our US business. The acquisition of
Modu-Loc in 2022 provided the foundation
for our eleventh Specialty business line,
Temporary Fencing. Residential
construction is a small proportion of
ourbusiness as it is not a heavy user of
equipment. In the UK, Specialty areas
represent c. 65% of our business.
Our customers range in size and scale from
multinational businesses, through strong
local contractors to individual do-it-
yourselfers. Our diversified customer base
includes construction, industrial and
homeowner customers, service, repair and
facility management businesses, emergency
response organisations, event organisers,
as well as government entities such as
municipalities and specialist contractors.
The nature of the business is such that it
consists of a high number of low-value
transactions. In the year to April 2023,
Sunbelt US dealt with over 750,000
customers, who generated average
rentalrevenue of $9,900.
The individual components of our General
Tool fleet are similar to our peers. However,
this is complemented by our Specialty
businesses offering a broad range of
differentiated equipment. It is the breadth
and depth of our fleet across our General
Tool and Specialty businesses that
differentiates us from our peers and
provides the potential for higher returns.
The size, age and mix of our rental fleet is
driven by the needs of our customers,
market conditions and overall demand.
Theequipment we provide to each customer
is diverse and we are often involved in
supplying various types of equipment
overan extended period at each distinct
stage of a project’s development. Our
equipment is also used in a wide range
ofother applications including industrial,
events, repair and maintenance and
facilitiesmanagement.
How we operate
Our operating model is key to the way we
deliver operational excellence:
− In the US we achieve scale through
a‘clustered market’ approach of
grouping large and small General
Tooland Specialty rental locations in
each market. This approach allows us
toprovide a comprehensive product
offering and convenient service to our
customers wherever their job sites
maybe within these markets. When
combined with our purchasing power,
this creates a virtuous circle of scale.
You can find out more on our cluster
strategy on page 31.
− In Canada, we are focused on expanding
our presence in the Western and
Eastern provinces, while achieving
scale through a clustered market
approach similar to the US. The
businesses we acquired have strong
positions in construction equipment,
mobile elevating work platforms and
general tools. We are expanding the
range of products available to
customers in all areas, including
building up our specialty service
offering. The acquisition of Modu-Loc
provides the foundation for our eleventh
Specialty business, Temporary Fencing.
− In the UK, our strategy is focused on
having a store structure that allows us
to offer a full range of General Tool and
Specialty equipment on a nationwide
basis. We are migrating to a regional
operating centre model with a few,
larger locations which are able to
address all the needs of our customers
in their respective markets, combined
with smaller, local locations, not
dissimilar to a cluster approach. This
approach reflects the nature of the
customer base (more national accounts)
and the smaller geography of the UK.
− Across our rental fleet, we generally
carry equipment from one or two
suppliers in each product range and
limit the number of model types of each
product. We believe that having a
standardised fleet results in lower
costs. This is because we obtain greater
discounts by purchasing in bulk and
reduce maintenance costs. We are also
able to share spare parts between
stores which helps minimise the risk of
over-stocking. Furthermore, we can
easily transfer fleet between locations
which helps us achieve strong levels of
fleet on rent, one of our key
performance indicators (‘KPIs’).
− We purchase equipment from well-
known manufacturers with strong
reputations for product quality and
reliability and maintain close
relationships with them to ensure
certainty of supply and good after-
purchase service and support. We work
with suppliers to provide early visibility
of our equipment needs which enables
them to plan their production schedules
and ensures we receive the fleet when
we need it.
− We also aim to offer a full-service
solution for our customers in all
scenarios. Our Specialty product range
includes equipment types such as
pumps, power generation, heating,
cooling, scaffolding, traffic management,
temporary flooring, structures and
fencing, trench shoring and lifting
services, which involve providing service
expertise as well as equipment.
08 Business mix – US
1 Construction ....................................40%
2 Non-construction ...........................60%
1
2
Ashtead Group plc Annual Report & Accounts 2023
24
Our business model continued
− We look to build rental penetration
through expanding the breadth and
depth of equipment we rent. As well as
our Specialty businesses, we are
increasingly focused on developing the
rental penetration of the smaller end of
our product range. Chart 09 shows how
the largest equipment in our fleet has
high levels of rental penetration while
the smaller, but often still costly to own,
equipment has not traditionally been
alarge part of the rental mix.
− We invest heavily in technology,
including the mobile applications
required to deliver efficient customer
service. Customers can track the
equipment they have on rent, place new
orders, request pickup or service or
extend their contract, either from their
desk or via a mobile app. Our sales reps
have access to the same information,
along with details of the location of our
fleet and all other information required
to serve the customer. Our order
fulfilment system utilises automated
workflows connected to and powering
our point of sale and logistics systems
to enable our sales reps to say ‘yes’ with
confidence. Technology enables our
business and provides power to the
platform and a significant advantage
over our competitors. One strategic
actionable component of Sunbelt 3.0
is‘Advance Technology’, which is
developing the next generation of these
tools, providing greater integration and
inter-connectivity which will deliver
abetter customer experience and
operational efficiency.
− Our large and experienced sales force is
encouraged to build and reinforce
customer relationships and to
concentrate on generating strong,
whole-life returns from our rental fleet.
Our sales force works closely with our
customers to ensure we meet their
needs. Through the application of
technology, it is equipped with real-time
access to fleet availability and pricing
information enabling it to respond
rapidly to the needs of a customer
whileoptimising returns.
− We guarantee our service standards
and promise our customers we will
make it happen. We believe that our
focus on customer service and the
guarantees we offer help distinguish
ourbusinesses from competitors and
assist us in delivering superior financial
returns. Our responsiveness to
customer needs is critical in a business
where c. 60% of orders are placed for
delivery within 24 hours. We have
long-standing relationships with
manyof our customers. Our customer
retention is high due to the scale and
quality of our fleet, our speed of
response and our customer service.
− Our local management teams are
experienced and incentivised to produce
excellent customer service, high quality
standards and strong financial returns.
We believe that the autonomy given to
management teams to take decisions
locally ensures that, despite our size, we
retain the feel of a small, local business
for our employees and our customers.
Investing in our people
Our people enable us to provide the
exceptional customer service that keeps
ourcustomers coming back. Our
exceptionalstaff and focus on service give
usa huge competitive advantage in what
wedo. On pages 64 to 67 we discuss the
importance of our team members and
corporate culture in more detail. We aim
torecruit good people and then invest in
themthroughout their careers.
HIGH LOW
09 Rental penetration – the product range
Ashtead Group plc Annual Report & Accounts 2023
25
STRATEGIC REPORT
Internally we refer to projects with a value
of over $400m as mega projects. These
can include data centres, healthcare
facilities, airports, liquid natural gas
plants, semiconductor facilities, electric
vehicle and battery plants, solar and wind
farms, etc. We are seeing an abundance
of these projects and a significant amount
of the overall non-residential and
non-building construction market
startsis now made up of them.
These projects have made up roughly
30% of recent years’ construction starts
values, more than double what they
represented in the past. There are
200mega projects that have started
withan average project cost of $1.2bn.
Inplanning and pre-bid phases there
area further 300 with an average value
of$1.9bn with estimated start dates
byDecember 2023.
Projects of this scale and sophistication
are ideal for resident, on-site solutions.
This means we often have dedicated
storage and working space on the actual
project site, housing a very large and
broad offering of our products and
associated services. These include
on-site maintenance and repair
technicians, as well as telematics-
equipped products, producing efficiency-
gaining benefits to our on-site and remote
teams, and of course for our customers.
Equipment and operators can be tagged
electronically so that checking equipment
on and off rent is done by automatic
scanning of the tags, requiring minimal
staff actually managing the rental
process itself. This speeds everything up
and is a highly efficient way of managing
equipment rental at scale. This on-site
setup also provides benefits such as
reduced carbon emissions to customers,
with equipment not moving on- and
off-site, and provides service backed up
by our mantra of Availability, Reliability
and Ease, essential for the success of
these mega projects.
Such projects require a rental company
with scale, experience, technology,
expertise, breadth of product and, of
course, financial capacity. We see these
mega projects as a material contributor
to structural change in our industry of
which we are a certain benefactor.
MEGA PROJECTS:
THE TRUSTED
PARTNER TO
MAKE BIG
THINGS HAPPEN
Ashtead Group plc Annual Report & Accounts 2023
26
Our business model continued
HVO
1
3
7
5
4
6
8
2
Map Key
1
On-site yard
2
On-site office
3
Service/tech bay
4
Access turnstile
5
Connected gateway (on/off rent)
6
Full-line of equipment
7
Mega project
8
Trailer city
MEGA PROJECTS: INDUSTRIES AND DRIVERS
Drivers/influencers
− Onshoring/reshoring
− Modern day industrial revolution
− Federal Government
InvestmentActs
− National Defence strategy
Solutions/imperatives
− Broad range of products,
solutions and expertise
− On-site operations
− Deliver once, use many times
− Carbon emissions reduction
− Uptime
− Utilisation
Types of projects
− Data centres
− Liquid natural gas facilities
− Semiconductor fabs
− Electric vehicle manufacturing
− Healthcare
− Lithium ion battery manufacturing
− Renewable energy
− Infrastructure/mass transit
Ashtead Group plc Annual Report & Accounts 2023
27
STRATEGIC REPORT
AMBITION WITH
PURPOSE – SUNBELT 3.0
Following our successful Project
2021,during which we increased our
revenue almost 75% from $3,825m in
2016 to $6,639m in 2021, we launched
the latest iteration of our strategic
plan, Sunbelt 3.0, in April 2021. Sunbelt
3.0 is ambitious and reflects what we
believe is achievable for Ashtead.
Our plan is infused with purpose
forallour stakeholders; our people,
ourcustomers, our suppliers, our
investors and our communities and
underpinned by critical cultural
elements. This has delivered US
revenue growth of 52% in the first two
years. We are ahead of schedule as we
enter the final year of Sunbelt 3.0 and
have already seen big cultural shifts
across our entire business.
While our business will always have a
degree of cyclicality, particularly given
the importance of the construction end
market, we have created a business
model that not only accommodates
that, but capitalises on it. We seek to
make the most of the structural
growthopportunities available to us,
particularly in the US and Canada,
through same-store investment,
greenfields and bolt-ons. From 2011
to2021, we achieved 16% compound
annual growth in the US, of which
two-thirds was from market share
gains. Now we are taking the business
to the next level, through Sunbelt 3.0.
We are conservative in our approach
tomaintaining a stable and secure
balance sheet throughout the cycle
which gives us the flexibility to manage
changes to the business and its
environment, as and when they occur.
We have been able to take decisions
based on the long-term prospects
forthe business without having to
takeshort-term decisions that could
damage the fabric of it. Being a highly
diversified business enables us to
withstand difficult times, as does our
strategic planning for any eventuality.
We work well in good times and bad.
That is what we do.
Our goal for Sunbelt 3.0 is to add 298
greenfield locations across North
America bringing us to a total of 1,234
locations in 2024, while in the UK, the
focus is on transforming the business
over the 3.0 period to deliver enhanced
and sustainable margins and returns.
By April 2023, we had already added
165 greenfield locations in North
America and a further 123 through
bolt-ons resulting in 1,213 locations
inNorth America, and the UK business
is seeing improved performance from
operating as a more cohesive unit.
Weare guided by five actionable
components which help us capitalise
onthe structural growth opportunities
still very much available in North
America and position us as the leading
rental company in the UK. These are
underpinned by three cultural elements
that make us who we are, investing
inour people, maintaining our
entrepreneurial culture but doing
thatat scale, and continuing to bring
Availability, Reliability and Ease to
ourcustomers.
Actionable components
1
Grow General Tool and
advance ourclusters
Advance our clustered market approach through a proven playbook to meet demand
and enable increased rental penetration in North America while optimising our
operationalnetwork in the UK.
2
Amplify Specialty
Drive accelerated growth through recently realised Specialty scale, unique cross-
selling capabilities, and demand in the early phases of rental penetration.
3
Advance technology
Make the move from industry-leading technology platform, to a leader among the
broader industrial and service sector; further improving our customer value
proposition and capture the benefits of scale across the Group.
4
Lead with ESG
Embracing responsible sustainability and success for our people, our customers, our
communities and our investors; while unlocking structural benefits ESG will bring to
rental across the Group.
5
Dynamic capital
allocation
Consistent application of our capital allocation policy to optimise capital deployment
for the benefit of all stakeholders.
Invest in our people Entrepreneurialism with scale
Bringing Availability, Reliability
andEasetoour customers
Underpinned by cultural elements
Ashtead Group plc Annual Report & Accounts 2023
28
OUR STRATEGY
Our Sunbelt 3.0 strategic priorities
STRATEGIC
PRIORITY
KEY
INITIATIVES
UPDATE RELEVANT
KPIs
RELATED
RISKS
1
Grow General
Tool and
advance our
clusters
− Organic fleet growth
− 126 greenfield openings in
North America
− Bolt-on M&A
− 49 of top 100 US markets
clustered by 2024
− Four of top 10 Canadian
markets clustered by 2024
− 13% US market share
− 9% Canadian market share
− 13% UK market share
− 15% increase in US average
fleet on rent
− 25% increase in Canadian
fleet on rent
− 77 greenfield openings in
North America in 2022/23
− North American Specialty
revenue of $2.5bn
− 47 of top 100 US markets
clustered
− Five of top 10 Canadian
markets clustered
− Eleventh Specialty business
line, Temporary Fencing,
added
− RoI
− Fleet on rent
− Dollar utilisation
− EBITDA margins
− Economic conditions
− Competition
− People and culture
2
Amplify
Specialty
− Revenue growth from
$1.4bn to $2.4bn
− Organic fleet growth
− 172 greenfield openings
− Bolt-on M&A
− Develop Specialty
products
− Focus on cross-selling
− RoI
− Fleet on rent
− Dollar utilisation
− EBITDA margins
− Economic conditions
− Competition
− People and culture
3
Advance
technology
− Operational improvement:
− delivery cost recovery
− fleet efficiency
− Increased use of
technology to drive optimal
service and revenue
growth
− ARE initiative: Availability,
Reliability, Ease
− Dollar utilisation:
− US: 61%
− Canada: 55%
− UK: 53%
− EBITDA margins:
− US: 48%
− Canada: 41%
− UK: 28%
− RoI
− Fleet on rent
− Dollar utilisation
− EBITDA margins
− Cyber security
− Laws and regulations
4
Lead with ESG
Making ESG core to how we
operate:
− Environmental efficiency
− Focus on culture
− Focus on safety
− 38.4 tCO
2
e/$m
(2022: 42.2 tCO
2
e/$m)
− Staff turnover
− US: 21%
− Canada: 29%
− UK: 23%
− Reportable incident rates
− US: TRIR of 0.97
− Canada: TRIR 0.89
− UK: RIDDOR of 0.25
− Carbon intensity
− Staff turnover
− Safety
− People and culture
− Health and safety
− Environmental
5
Dynamic
capital
allocation
− Organic growth
investment in existing
locations and greenfield
sites
− Bolt-on M&A
− Returns to shareholders
− $3,772m of capital invested
in the business (2022:
$2,397m)
− $1,146m spent on 50
bolt-ons (2022: $1,274m)
− $358m paid in dividends
(2022: $269m)
− Leverage of 1.6x EBITDA
(excluding IFRS 16)
− $261m allocated to share
buybacks
− Adjusted EPS
− RoI
− Net debt and
leverage
− Economic conditions
− Competition
Our goal in the long-term is to achieve 20% market share in North America and continue to grow our share of the UK market.
Webelieve these are realistic goals given the way the rental market continues to evolve and the way we do business. Consistent
implementation of our strategy across the economic cycle will ensure we are in a strong position at all times to take advantage
oftheopportunities presented.
Ashtead Group plc Annual Report & Accounts 2023
29
STRATEGIC REPORT
Grow General Tool
and advance our clusters
1
Market share: Locations:
0% 10% 15% April 2012 Location growth May 2012 to April 2023
Source: S&P Global Market Intelligence/ARA: State of the Equipment Rental Industry, April 2023 and management estimates.
HAWAII HAWAII
10 Market share and growth strategy
April 2012 April 2023
The first of our actionable components
is to grow our General Tool business
and advance our proven clustered
market approach to meet demand and
enable increased rental penetration
inNorth America.
In the UK, our focus is on optimising our
operational network. We are focused on
achieving operational improvements in
existing locations, exploiting latent
capacity in newly opened locations,
investing in fleet, leveraging the
economics of our cluster approach
andimproving rental rates.
Our plan included 126 General Tool
greenfield locations whose location was
determined based on our experience
and analytics down to the zip code level.
This analysis includes our assessment
of current market share, fleet per
capita, customer statistics,
construction starts, proximity to
existing locations, square footage under
roof and the competitive landscape. Our
greenfield openings are biased towards
the western part of the US where we
have lower market share. This organic
growth strategy is being complemented
by bolt-ons.
Our plans during Sunbelt 3.0 for
Canada involve bringing our market
share to our 2021 US level through
26greenfield openings, across all
provinces and advancing our clusters
around Toronto which is the largest
rental market. When we entered the
Canadian market in 2014 we acquired
six locations in Western Canada. At
April 2023 we had 73 General Tool
locations and 119 locations in total.
There is a drag on margins when we
open new stores but generally they
improve quickly as they deliver more
revenue and broaden the fleet and
customer mix. The same happens
withacquisitions because we buy
businesses we can improve, either
operationally or through additional
investment, or both. Even when the
market declines, as was the case in
2020/21, our stores can continue to
benefit from the structural part of the
growth which is independent of the
market. The strength of our brand and
reputation means that greenfield sites
become profitable very quickly. The
diversity of our product portfolio and
services only adds to this.
Structural growth is people choosing
to rent more equipment (increased
rental penetration) and the big getting
bigger (increased market share). We
are able to keep growing because we
prioritise investment in the fleet and
have the financial strength to do that.
Our customers want good quality fleet,
readily available to meet their needs.
Investing in a broad range of fleet and
backing that up with great service
means our customers remain loyal
and do not need to look elsewhere.
Prioritising higher return on
investment (‘RoI’) products
furtherhelps our growth.
Ashtead Group plc Annual Report & Accounts 2023
30
Our strategy continued
Our cluster approach
Our cluster approach is an important
aspect of our strategy. Our greenfield
sites are chosen to enhance our existing
business. We focus on building clusters
of stores because, as they mature, they
access a broader range of markets
unrelated to construction leading to
better margins and RoI. The size and
composition of a cluster depends on
themarket size based on Designated
Market Areas.
A top 25 market cluster in the US
hasmore than 15 stores, a top 26-50
market cluster more than 10 stores
and a top 51-100 market more than
fourstores. We also include the
smaller 101-210 markets within our
cluster analysis. We have found that
these smaller markets, while
performing less well than others
overall, often prove more resilient
when times are less good. Our definition of
a cluster in these markets is two or more
stores. Creating clusters is also a key
element of our expansion strategy in
Canada which also helps us increase the
Specialty business element of what we can
provide for customers. With the advanced
technology we have in place, we are able
to analyse local market data accurately.
This allows us to find similarities between
certain US and Canadian centres, and
model our growth plans accordingly. The
more customers get to know and trust us,
the faster we are able to grow.
We focus on ensuring our clusters meet
the multiple needs of local customers
even if that means some stores may
appear superficially to perform less
wellthan others. The interaction of the
stores in a cluster is what gives us real
competitive advantage. We find that having
a blend of locations is highly desirable and
we like to mix up the large equipment
locations with smaller General Tool
stores. The addition of Specialty stores
serves to differentiate us from
competitors in the area. This enables
usto broaden and diversify our
customer base and our end markets,
aswe extend our reach within amarket.
Average revenue per store is not a
relevant measure with which to
evaluate the success of individual
clusters or even the business as
awhole. The value is in themix.
11 Opportunity to build out further clusters
US
Rental markets Top 25 26–50 51–100 101–210
Rental market % 57% 19% 15% 9%
Cluster definition >15 >10 > 4 >1
Clustered 18 11 18 25
Canada
Rental markets Top 5 6–10 11–55
Rental market % 51% 16% 33%
Cluster definition >7 > 4 >1
Clustered 3 2 8
Source: Management information.
22%
Growth in North
American General Tool
revenue in 2022/23
37
General Tool acquisitions
completed in North
America
STRATEGIC REPORT
31
Ashtead Group plc Annual Report & Accounts 2023
Amplify
Specialty
2
Our second actionable component is to
amplify our Specialty businesses which
focus on products with comparatively
low rental penetration in predominantly
non-construction markets. These
products are often a natural add-on to
our General Tool products and services.
We are always looking for new rental
opportunities and to expand the number
of our Specialty businesses which in
North America include:
− Power and HVAC;
− Climate Control and Air Quality;
− Scaffold Services;
− Flooring Solutions;
− Lighting, Grip & Lens;
− Pump Solutions;
− Industrial Tool;
− Trench Safety;
− Ground Protection;
− Temporary Structures; and
− Temporary Fencing.
In North America we are investing in
fleet to enable existing location growth
as well as continuing our greenfield
openings and bolt-on acquisitions. We
are scaling the less developed business
lines and identifying and exploring and
developing new white and grey space
opportunities. Our acquisition of
Modu-Loc, Canada’s leading temporary
fencing provider created our eleventh
Specialty business line in North
America and we see significant
opportunities to expand this business
into the US.
Our Specialty businesses are true
specialisms with in-house experts
ineach business line with in-depth
product and application knowledge,
who enable us to provide the very best
level of service to our customers.
We are looking to grow our North
American Specialty revenue to
c.$2.4bn during Sunbelt 3.0 through
our ambitious plans to drive rental
penetration and increase our market
share. The strong growth in our existing
Specialty businesses, combined with
the contribution from our new
businesses, Temporary Structures and
Temporary Fencing, delivered Specialty
revenue of $2.5bn in the year. We have a
broad-based team identifying new
rental product ideas for both existing
and new businesses, and a culture
thatencourages ideas at all levels
ofthe organisation building
entrepreneurialism with scale.
In the UK we are making targeted
fleetinvestment, accelerating
Specialtygrowth through cross-selling
and also identifying and developing new
acquisition opportunities to enhance
existing Specialty businesses. In the
UKwe are seeing significant growth
incross referrals.
Ashtead Group plc Annual Report & Accounts 2023
32
Our strategy continued
Advance
technology
3
The third of our strategic actionable
components is advancing the way we use
technology. We are moving from being an
industry-leading technology platform to
being a leader among the broader
industrial and service sector, further
improving our customer value proposition
and capturing benefits of scale across the
Group. We do this by:
− leveraging our experience, culture and
the data we accumulate day to day;
making what we create, sustainable
andscalable;
− building a technology-driven
ecosystem; enabling eCommerce
across all channels;
− ensuring we improve further our
customer value proposition of
Availability, Reliability and Ease; and
− migrating our common applications
toagroup-wide platform.
We have a robust technology
infrastructure which supports our
proprietary systems with the aim of
continuous improvement to enable The
Perfect Rental
™
. With c. 60% of orders
placed for delivery within 24 hours, our
goal is to enable our sales force to say
‘Yes’ confidently, through the use of our
proprietary cloud-based sourcing decision
engine, Chronos. Our Sunbelt 3.0
technology roadmap is designed to
enhance the capability of all our systems,
mobile applications and tools to make
them ever smarter and more flexible,
suchthat they deliver improvements
incustomer service, procurement
opportunities, service operations, logistics
and our management of resources. We
are focused specifically on increasing
order capture, improving time utilisation,
enhanced connectivity, improving rental
rates, more dynamic pricing and
enhancing customer service.
IF IT’S NOT PERFECT, WE MAKE IT RIGHT!
Safety for our people, our customers andour communities
Availability, Reliability and Ease
Professional and friendly interaction
Right equipment for the application
Delivered on time
Easy and efficient omni-channel experience
Smartly dispatched
No breakdown in first 48 hours
Optimised pricing
Proactive telematics notifications
Sustainable process
The Sunbelt Promise
The Perfect Rental
™
Ashtead Group plc Annual Report & Accounts 2023
33
STRATEGIC REPORT
Lead
with ESG
4
A major update to our strategy in
launching Sunbelt 3.0 was the inclusion,
for the first time, of ESG as an
actionable component. Responsible
sustainability has always been
important to the Group and part of
ouractivities day-to-day, but now it is
formally embedded into our strategy
forthe benefit of our people, customers,
suppliers, communities and investors,
as well as optimising the structural
benefits ESG brings to rental. This is an
important element in what we mean by
Ambition with Purpose for Sunbelt 3.0.
We believe there are enormous
environmental benefits associated with
rental versus ownership at all stages of
the business life cycle, from the supply
chain, to operations, customer use and
end of life of equipment. Significant
environmental benefits accrue when
many customers rent one piece of
well-maintained and safe equipment
only when they need it, as opposed to
multiple customers purchasing that
same piece of equipment, using it a
fewtimes, then disposing of it when it
becomes obsolete or no longer needed.
This is a prime example of the sharing
economy. Increased rental of shared
assets reduces the number of machines
that need to be manufactured with the
benefit of lower consumption of raw
materials, fewer manufacturing
facilities and hence, lower energy
requirements, and fewer assets to be
disposed of at end of life. Our rental
equipment is also amongst the lowest
carbon emitting available. As we renew
our rental equipment and take
advantage of the latest technology, we
will be able to expand our offering of low
carbon solutions to our customers. We
have made a commitment to reduce our
Scope 1 and 2 carbon intensity by 35%
by 2030 and by 15% during Sunbelt 3.0.
We have made good progress with
2022/23 carbon intensity 30% lower
than the baseline of 2017/18 and further
reductions will come, principally from
environmental efficiencies in our
transportation fleet and the facilities
weoperate.
From a social perspective, our people
are our top priority. Ours is a culture
committed to employee safety,
engagement, diversity, equity and
inclusion, and providing a Leading /
Living Wage. Putting our people first
allows them to give us enormous
competitive advantage and our
skilledworkforce is instrumental
totheGroup’s long-term success.
As an essential service provider,
wesupport our customers and
communities, whether investing in
thecommunities in which our people
live and work, participating with first
responders for emergencies, or natural
disaster response such as hurricane
relief. You can read more about our ESG
strategy in our Responsible business
report on page 60 and about
governance in the Corporate
governance report on page 90.
Ashtead Group plc Annual Report & Accounts 2023
34
Our strategy continued
Our final actionable component is
dynamiccapital allocation; the consistent
application of our capital allocation policy
to optimise capital deployment for the
benefit of all our stakeholders. Maintaining
financial and operational flexibility enables
us to flex our business and operational
models through the economic cycle.
Thisenables us to react quickly to both
opportunities in the market and adverse
changes. The more growth we experience
and plan for, the more financial and
operational flexibility we need. A key
element of our strategy is ensuring we
have the financial strength to enable
growth when appropriate and make our
returns sustainable. Having a strong
balance sheet is fundamental to our
success at all stages in the cycle.
Our consistently applied policy continues
with the following allocation priorities:
− organic growth investment in existing
locations and greenfield sites;
− bolt-on acquisitions; and
− returns to shareholders – a progressive
dividend policy and share buybacks to
maintain our target leverage range.
A core element of our financial stability
comes from our strategy of ensuring that,
averaged across the economic cycle, we
always deliver RoI well ahead of our cost
of capital. RoI through the cycle is the key
measure for any rental company and the
best medium-term indicator of the
strength of the business. We do this in
avariety of ways at different stages of
thecycle, all focused on the effective
management of invested capital and
financial discipline.
The maturity of our stores has a big
impact on RoI. As stores mature, and the
size and range of fleet increases, there is
natural margin and returns progression.
Stores that were greenfield sites only
twoyears ago are now already adding
same-store growth. We are always
focused on moving new and young stores
up the maturity curve as there is scope for
higher returns as they progress. This also
means that we are now at a very different
stage in our evolution in the current
economic cycle relative to where we were
in the last cycle. We have more stores and
they are larger and more mature than at
the peak of the last cycle, and are well
placed to take advantage of growth
opportunities and much better placed to
weather downturns, when they arise, as
was seen during the pandemic.
We have been consistent in our
commitment to both low leverage and a
well invested fleet, and we benefit from
the options this strategy has provided. The
length and gradual nature of the last cycle
enabled us to establish a smooth, well
distributed fleet profile across the age
bands which provides significant flexibility
across the economic cycle. Traditionally,
rental companies have only generated
cash in a downturn when they reduce
capital expenditure and age their fleet. In
the upturn, they consume cash as they
replace their fleets and then seek to grow.
We have changed this dynamic through
the cycle with our scale and strong
margins. We have been in a phase where
we continued to grow the business in the
latter part of the last cycle and were highly
cash generative. This cash generation
continued in 2022/23, with free cash flow
of $531m, while we invested significantly
in the business. Our leverage remains
towards the bottom of our target range
of1.5 to 2.0 times net debt to EBITDA
(excluding IFRS 16) which provides the
Group with significant flexibility, security
and a platform for growth as we look to
take advantage of good markets.
This financial position, when combined
with the scale, maturity and diversity of
the business, puts us in a strong position
as we look forward to Sunbelt 4.0. Free
cash flow from operations will fund 100%
of our ambitious organic growth plans,
leaving significant capacity for bolt-ons
and returns to shareholders.
Dynamic capital
allocation
5
CULTURAL
ELEMENTS
Underpinning our five actionable
components are our cultural
elements of investing in our
people; fostering a culture of
‘entrepreneurialism with scale’;
and continuously delivering on
our customer promise of
Availability, Reliability and Ease.
We believe our culture drives the
success of our business and, as
such, these elements underpin
our strategic plan and are critical
to its delivery.
Ashtead Group plc Annual Report & Accounts 2023
35
STRATEGIC REPORT
AMPLIFY
SPECIALTY
2
Drive accelerated growth by leveraging
recently realised Specialty scale, unique
cross-selling capabilities and demand in
theearly phases of rental penetration.
500
Specialty locations at
April 2023
+27%
growth in North American
Specialty revenue in 2022/23
$2.5bn Specialty revenue in
2022/23 in North America
Scaling of less developed
businesses
61 greenfield locations added in
2022/23 in North America
13 Specialty acquisitions
completed in the UK and
NorthAmerica
2023 highlights
Ashtead Group plc Annual Report & Accounts 2023
36
Driving growth in Specialty
In line with our strategic plan, Sunbelt 3.0,
our acquisition of Modu-Loc, Canada’s
leading temporary fencing provider
created our eleventh Specialty business
line in North America and we see
significant opportunities to expand this
business into the US.
We also extended our Film and TV
specialisation with the acquisition of UK
camera, lens and grip rental specialist,
Movietech, photographic and TV lighting
specialist, PKE Lighting and leading
powered access provider, Media Access
Solutions. The combined knowledge and
expertise of these new businesses, with
film and television production rental
specialists William F. White International
Inc., is already proving to be a true
differentiator for usand our customers.
Ashtead Group plc Annual Report & Accounts 2023
37
STRATEGIC REPORT
MEASURING OUR
PERFORMANCE
At Group level, we measure the performance of the
business using a number of key performance indicators
(‘KPIs’). These help to ensure that we are delivering against
our strategic priorities as set out on page 28. Several of
these KPIs (adjusted EPS, return on investment, leverage
and carbon intensity) influence the remuneration of our
executive team (see page 105).
Certain KPIs are more appropriately measured for each
ofour operating businesses, whereas other KPIs are best
measured for the Group as a whole.
Adjusted EPS (¢) Return on investment (‘RoI’) (%) Net debt and leverage at
constant exchange rates
2 51
R
2 51
R
5
R
227
222
219
307
388
2019 2020 2021 2022 2023
18
15 15
18
19
2019 2020 2021 2022 2023
Apr 23
6,588
5,179
4,180
5,368
4,882
Apr 22Apr 21Apr 20Apr 19
Net debt ($m) Leverage (x)
1.5
1.4
1.9
1.8
1.6
Calculation
Adjusted Group profit after taxation divided
by the weighted average number of shares in
issue (excluding shares held by the Company
and the ESOT).
Target
As a cyclical business, adjusted EPS varies
through the cycle.
2023 performance
Adjusted EPS was 388.5¢ per share in
2022/23.
Calculation
Last 12-month (‘LTM’) adjusted operating
profit divided by the LTM average of the sum
of net tangible and intangible fixed assets,
plus net working capital but excluding net
debt and tax. RoI is calculated excluding the
impact of IFRS 16.
Target
Averaged across the economic cycle we look
to deliver RoI well ahead of our cost of
capital, as discussed in our strategic review.
2023 performance
Our RoI was 19% for the year ended
30April2023.
Calculation
Net debt is total debt less cash balances, as
reported, and leverage is net debt divided by
EBITDA, calculated at constant exchange
rates (balance sheet rate). Both net debt and
leverage exclude the impact of IFRS 16.
Target
We seek to maintain a conservative
balancesheet structure with a target for net
debt to EBITDA of 1.5 to 2.0 times (excluding
IFRS 16).
2023 performance
Excluding lease liabilities arising under IFRS
16, net debt at 30 April 2023 was $6,588m
and leverage was 1.6 times.
Link to strategic priority:
1
Grow General Tool and
advance ourclusters
2
Amplify Specialty
3
Advance technology
4
Lead with ESG
5
Dynamic capital allocation
R
Linked to remuneration
Key:
Ashtead Group plc Annual Report & Accounts 2023
38
KEY PERFORMANCE INDICATORS
Fleet on rent ($m/£m/C$m) Dollar utilisation (%) EBITDA margins (%)
21 3 21 2
5
1 3
6,595
580
398
7,524
626
500
8,629
655
627
2021 2022 2023
US UK Canada
2021 2022 2023
US UK Canada
50
54
47
57
58
55
61
53
55
49
30
44
48
30
45
48
28
41
2021 2022 2023
US UK Canada
Calculation
Fleet on rent is measured as the daily
average of the original cost of our itemised
equipment on rent.
Target
To achieve growth rates in excess of the
growth in our markets and that of our
competitors.
2023 performance
In the US, fleet on rent increased 15% (rental
revenue up 24%), in Canada, fleet on rent
increased by 25% (rental revenue up 22%),
while in the UK it increased by 5% (rental
revenue up 3%). The US market increased by
12%, the Canadian market by 8% and the UK
market by 4%.
Calculation
Dollar utilisation is rental revenue divided by
average fleet at original (or ‘first’) cost
measured over a 12-month period.
Target
Improve dollar utilisation to drive improving
returns in the business.
2023 performance
Dollar utilisation was 61% in the US, 53% in
the UK and 55% in Canada. The increase in
the US reflects improved rate environment
while, in the UK, the decrease reflects the
lower level of ancillary revenue due to the
reduction in the work done for the
Department of Health work.
Calculation
EBITDA as a percentage of total revenue.
Target
To improve or maintain margins with EBITDA
margins of 40-50% in the US, 40-45% in
Canada and 35-40% in the UK.
2023 performance
EBITDA margins in 2022/23 were 48% in the
US, 41% in Canada and 28% in the UK.
Carbon intensity (tCO
2
e/$m) Staff turnover (%) Safety
4
R
4 4
54.0
51.7
48.5
42.2
38.4
2018 2020 2021 2022 2023
17
17
21
21
25
28
21
23
29
2021 2022 2023
US UK Canada
1.07
2.12
0.90
1.49
0.97
0.89
0.27
0.22
0.25
2021 20212022 20222023 2023
US (TRIR) UK (RIDDOR)Canada (TRIR)
Calculation
Carbon intensity is calculated as emissions
per $m of revenue (tCO
2
e/$m), calculated at
constant exchange rates.
Target
To reduce our carbon intensity by 35% by
2030 with reference to 2018 as a base year,
with a shorter term target of 15% by 2024.
2023 performance
Our carbon emission intensity ratio was 38.4
(2022: 42.2).
Calculation
Staff turnover is calculated as the number
ofleavers in a year (excluding redundancies)
divided by the average headcount during
theyear.
Target
Our aim is to keep employee turnover below
historical levels to enable us to build on the
skill base we have established and maintain
and enhance the culture of the business.
2023 performance
Employee turnover and the actions we are
taking to reduce it are discussed on page 65.
Our well-trained, knowledgeable staff remain
targets for our competitors.
Calculation
In North America, reportable incidents are
reported in accordance with the OSHA
(Occupational, Safety and Health Administration)
framework as a Total Recordable Incident Rate
(‘TRIR’). In the UK, the RIDDOR (Reporting of
Injuries, Diseases and Dangerous Occurrences
Regulations) reportable rate is the number of
major injuries or over seven-day injuries per
100,000 hours worked.
Target
Continued reduction in accident rates.
2023 performance
The TRIR was 0.97 in the US and 0.89 in Canada.
The RIDDOR reportable rate was 0.25 in the UK.
More detail is included in our Responsible
business report on page 60.
Ashtead Group plc Annual Report & Accounts 2023
39
STRATEGIC REPORT
MANAGING
OUR RISK
The Group recognises the importance
of identifying and managing financial
and non-financial risks faced by the
business. In response to this, it has
developed a rigorous risk management
framework designed to identify and
assess the likelihood and
consequences of risks and to manage
the actions necessary to mitigate their
impact, including those related to
climate-related matters.
Our risk identification processes seek
to identify risks from both a top-down
strategic perspective and a bottom-up
business perspective. The Board has
overall responsibility for risk
management, setting of risk appetite
and implementation of the risk
management policy. This is designed
toenable our employees to take
advantage of attractive opportunities,
yet to do so within the risk appetite set
by the Board.
The Group Risk Register is the core of
the Group’s risk management process.
It contains an overall assessment of
therisks faced by the Group together
with the controls established to reduce
those risks to an acceptable level and
ismaintained by the Group Risk
Committee. The Group Risk Register
isbased on detailed risk registers
maintained by Sunbelt in North
America and the UK, which are
reviewed and monitored through local
risk committees. The operation and
effectiveness of the local risk
committees, which meet two to four
times a year, continues to be enhanced.
The Group Risk Committee meets as
required, but at least twice a year, with
the objective of encouraging best risk
management practice across the Group
and a culture of regulatory compliance
and ethical behaviour. The Committee
is chaired by our chief financial officer
and also includes:
− in relation to North America:
− the general counsel;
− the chief financial officer;
− the head of central operations;
− the head of administration and
business development;
− the chief people officer;
− the chief digital and technology
officer;
− the head of health, safety and
environment; and
− one of the operational executive
vice presidents;
− in relation to the UK, the chief
financial officer, who chairs the UK
business risk committee;
− the Group’s managing director
ofESG;
− the Group’s head of internal audit
andrisk officer; and
− the Group’s general counsel.
The Group Risk Committee reports
annually through the Audit Committee
to the Board and, as part of this
process, produces an updated Group
Risk Register. The Board assesses on
aregular basis whether the appropriate
risks have been identified, including any
emerging risks which may impact the
Group, and that adequate assurance
isobtained over those risks.
In addition, consideration is given to
ensure that risks have been
appropriately assessed in relation to
risk rating. Our risk appetite is reflected
in our rating of risks and ensures the
appropriate focus is placed on the
correct risks. The Board takes a view
ofthe prospects of the business
through the cycle and, given the
inherent cyclicality in the business,
tends to operate with a low risk
appetite. Further detail on our risk
management framework and
prioritiesduring the year is
providedonpages 41 to 45.
The Group Risk Committee priorities
this year included:
− assessment of the Group Risk
Register, including identification and
prioritisation of business risks;
− health and safety, together with
continuous improvement through
training and awareness;
− driver safety, training and
compliance;
− focus on the continued development
of our technology environment,
including cyber security;
− assessment of the environmental
and social impact of the Group,
including emerging risks such as
climate change;
− monitoring of compliance with laws
and regulations; and
− performance standards audits.
Our priorities for next year focus on the
principal areas of risk to the Group and
are similar. In particular:
− continue our safety initiatives,
Engage for Life: Amplified, focused
on serious injury and fatality (‘SIF’)
protocols and driver programmes;
− focus on the development of our
technology environment in
accordance with the Group’s
strategic plans, including a continued
focus on cyber security; and
− focus on our ESG initiatives,
delivering against our environmental
and social priorities.
Ashtead Group plc Annual Report & Accounts 2023
40
PRINCIPAL RISKS AND UNCERTAINTIES
Risk management framework
Group risk register
Group Risk Register summarises work of Group Risk Committee, changes in risks identified and details by significant risk
material controls and monitoring activities completed.
Risk appetite determined
Risk appetite determined with reference to the Group’s risk categories:
STRATEGIC OPERATIONAL FINANCIAL
Group Risk Committee
− Reviews key and emerging risks
on a regular basis with support
from the businesses’ risk
committees which meet two to
four times a year.
− Receives in-depth presentations
from the businesses’ risk
committees on key matters.
Audit Committee
− Receives presentation from
Group Risk Committee on the
Group Risk Register on an
annual basis.
− Assesses effectiveness of risk
management process.
Board
− Overall responsibility for risk
management framework and
the definition of risk appetite.
− Undertakes Board monitoring
ofsignificant risks throughout
the year.
− Assessed both on a
top-down and bottom-up
basis.
− Risks considered most
material to the business.
− Consideration of
emerging risks.
− Financial, operational,
environmental and
regulatory impacts
considered.
− Risk appetite assessed for
individual risks in
accordance with our
overall Group risk appetite.
− Mitigating controls
identified, implemented
and monitored to
ensure risk is reduced
to an acceptable level.
RISK
IDENTIFICATION
ASSESSMENT
OFLIKELIHOOD
AND IMPACT
RISK
APPETITE
DETERMINED
MITIGATING
CONTROLS
IMPLEMENTED
Ashtead Group plc Annual Report & Accounts 2023
41
STRATEGIC REPORT
PRINCIPAL
RISKS
Set out below are the principal
business risks that could impact
theGroup’s business model,
futureperformance, solvency or
liquidity and information on how
wemitigate them.
Our risk profile evolves as we move
through the economic cycle and
commentary on how risks have
changed is included below. The
Committee has considered whether
climate-related matters represent
aprincipal risk for the Group. The
Group believes that climate-related
matters are addressed principally
through our environmental risk
andour commitment to reduce
carbon intensity.
On balance, the Committee believes
that climate change and emerging
technologies will increase the
demand for rental and continue
theshift from ownership to rental,
rather than presenting a risk to our
business model.
Economic conditions
2
5
1
Potential impact
In the longer term, there is a link between
levels of economic activity and demand
forour services. The most significant
endmarket which affects our business
isconstruction. The construction market
iscyclical and typically lags the general
economic cycle by between 12 and
24months.
The economic uncertainties resulting
fromthe impact of pandemics (such as
COVID-19) is considered as part of this risk.
Mitigation
− Prudent management through the
different phases of the cycle.
− Flexibility in the business model.
− Capital structure and debt facilities
arranged in recognition of the cyclical
nature of our market and able to
withstand market shocks.
Change
Our business continues to perform strongly
and is well positioned to manage and
benefit from the unique market conditions
we face, including supply chain constraints,
inflation and labour scarcity, all of which we
believe will be ongoing drivers of structural
change. However, while market forecasts
are predicting continued growth both in
terms of starts and the rental market,
supported by the emergence of ‘mega
projects’, there remains some uncertainty
in end market conditions.
Competition
2 51
Potential impact
The already competitive market could
become even more competitive and we
could suffer increased competition from
large national competitors or small
companies or local companies resulting in
reduced market share and lower revenue.
This could negatively affect rental rates
andphysical utilisation. Continuing
industryconsolidation could also have
asimilar effect.
Mitigation
− Create commercial advantage by
providing the highest level of service,
consistently and at a price which offers
value.
− Differentiation of service.
− Enhance the barriers to entry to
newcomers provided by our platform:
industry-leading technology, experienced
personnel and a broad network and
equipment fleet.
− Regularly estimate and monitor our
market share and track the performance
of our competitors.
Change
Our competitive position continues to
improve. We have grown faster than the
market, and continue to take market share
from our smaller, less well financed
competitors. We have a 13% market share
in the US, a 9% market share in Canada and
a 13% market share in the UK.
Change in risk in 2022/23:
Increased risk
Constant risk
Decreased risk
Link to strategic priority:
1
Grow General Tool and
advance ourclusters
2
Amplify Specialty
3
Advance technology
4
Lead with ESG
5
Dynamic capital allocation
Key:
Ashtead Group plc Annual Report & Accounts 2023
42
Principal risks and uncertainties continued
Cyber security
3
Potential impact
A cyber-attack or serious uncured failure in
our systems could result in us being unable
to deliver service to our customers and/or
the loss of data. In particular, we are heavily
dependent on technology for the smooth
running of our business given the large
number of both units of equipment we rent
and our customers. As a result, we could
suffer reputational loss, revenue loss and
financial penalties.
This is the most significant factor in our
business continuity planning.
Mitigation
− Stringent policies surrounding security,
user access, change control and the
ability to download and install software.
− Testing of cyber security including red
team exercises, system penetration
testing and internal phishing and other
training exercises undertaken.
− Use of antivirus and malware software,
firewalls, email scanning and internet
monitoring as an integral part of our
security plan.
− Use of firewalls and encryption to
protectsystems and any connections
tothird parties.
− Use of multi-factor authentication.
− Continued focus on development of IT
strategy taking advantage of cloud
technology available.
− Separate near-live back-up data centres
which are designed to be able to provide
the necessary services in the event of a
failure at a primary site.
Change
We continue to enhance the Group’s cyber
security profile, with a significant and
ongoing investment in resource and
tooling. Nevertheless, cyber security
remains a continually evolving area and
apriority for the Group.
In relation to business continuity, our plans
have been subject to continued review and
update during the year and our disaster
recovery plans are tested regularly.
Health and safety
4
Potential impact
A failure to comply with laws and
regulations governing health and safety
and ensure the highest standards of health
and safety across the Group could result in
accidents which may result in injury to or
fatality of an individual, claims against the
Group and/or damage to our reputation.
Mitigation
− Maintain appropriate health and safety
policies and procedures regarding the
need to comply with laws and regulations
and to reasonably guard our employees
against the risk of injury.
− Induction and training programmes
reinforce health and safety policies.
− Programmes to support our customers
exercising their responsibility to their own
workforces when using our equipment.
− Maintain appropriate insurance coverage.
Further details are provided on page 55.
Change
The health and safety of our team members
continues to be a key focus area for the
Group and an area of continuous
improvement.
In terms of reportable incidents, the TRIR
was 0.97 (2022: 0.90) in the US and 0.89
(2022: 1.49) in Canada. The RIDDOR
reportable rate was 0.25 (2022: 0.22) in the
UK. Further details are provided in our
Responsible business report.
People and culture
21 4
Potential impact
Retaining and attracting good people is key
to delivering superior performance and
customer service and maintaining and
enhancing our culture.
Excessive staff turnover is likely to impact
on our ability to maintain the appropriate
quality of service to our customers and our
culture and would ultimately impact our
financial performance adversely.
At a leadership level, succession planning
is required to ensure the Group can
continue to inspire the right culture,
leadership and behaviours and meet its
strategic objectives. Furthermore, it is
important that our remuneration policies
reflect the Group’s North American focus
and enable us to retain and enhance our
strong leadership team.
Mitigation
− Provide well-structured and competitive
reward and benefit packages that
ensure our ability to attract and retain
the employees we need.
− Ensure that our staff have the right
working environment and equipment to
enable them to do the best job possible
and maximise their satisfaction at work.
− Invest in training and career
development opportunities for our
people to support them in their careers.
− Ensure succession plans are in place
and reviewed regularly which meet the
ongoing needs of the Group.
Change
Our compensation and incentive
programmes have continued to evolve to
reflect market conditions, the economic
environment and the results of our
employee engagement surveys. We intend
to address the remuneration gap between
the Group and its US peers in our next
remuneration policy.
Diversity, equity and inclusion programmes
are established across the business to
enhance our efforts to attract and retain
the best people.
We are increasing our focus on mental
health including ‘Let’s Talk Mental Health’
in the UK.
Ashtead Group plc Annual Report & Accounts 2023
43
STRATEGIC REPORT
Environmental
4
Potential impact
The Group has made a long-term
commitment to reduce its Scope 1 and 2
carbon intensity by 35% by 2030, from its
level in 2018, with a near-term commitment
to reduce its carbon intensity by 15% by
2024, and set out a roadmap to achieve this.
Failure to do so could adversely impact the
Group and its stakeholders.
A significant part of our rental fleet is reliant
on diesel engines. Over time, lower carbon
alternatives will become available as
technology advances. If we do not remain at
the forefront of technological advances, and
invest in the latest equipment, our rental
fleet could become obsolete.
In addition, we need to comply with the
numerous laws governing environmental
protection matters. These laws regulate
such issues as waste water, storm water,
solid and hazardous wastes and materials,
and air quality. Breaches potentially create
hazards to our employees, damage to our
reputation and expose the Group to,
amongst other things, the cost of
investigating and remediating
contamination and also fines and penalties
for non-compliance.
Mitigation
− Policies and procedures in place at all
our stores regarding the need to adhere
to local laws and regulations.
− Procurement policies reflect the need for
the latest available emissions
management and fuel efficiency tools in
our fleet.
− Collaboration with key suppliers to
develop and pilot new technologies.
− Lower carbon vehicle transition plan.
− Real estate and facility standards to
reduce emissions from our operations.
− Monitoring and reporting of
carbonemissions.
Change
The Group has appointed a SVP of
Sustainability to lead our work on
sustainability-related matters, including
those relating to the impact of climate
change on the environment.
The work of the Health, Safety and
Environmental departments, and the
Sustainability and operational audit teams,
continue to assess environmental
compliance.
Our 2021/22 Scope 1 and 2 carbon
emissions have been validated by the
Carbon Trust and we will obtain assurance
over our 2022/23 Scope 1 and 2 data prior
to the publication of the Group’s 2022/23
Sustainability report.
In 2022/23 our Scope 1 and 2 carbon
emission intensity ratio reduced to 38.4
(2022: 42.2). Further detail is provided on
page 68.
We are working to quantify our Scope 3
emissions, the largest components of
which are category 11 (use of sold products)
and category 13 (downstream leased
assets). These categories are complex to
measure and reliant on significant
assumptions and estimation techniques.
Laws and regulations
3 4
Potential impact
Failure to comply with the frequently
changing regulatory environment could
result in reputational damage or
financialpenalty.
Mitigation
− Maintaining a legal function to oversee
management of these risks and to
achieve compliance with relevant
legislation.
− Group-wide modern slavery, business
ethics and ethical sourcing policies and
whistle-blowing arrangements.
− Evolving policies and practices to take
account of changes in legal obligations.
− Training and induction programmes
ensure our staff receive appropriate
training and briefing on the
relevantpolicies.
Change
We monitor regulatory and legislative
changes to ensure our policies and
practices reflect them and we comply with
relevant legislation.
Our whistle-blowing arrangements are
well established and the Company
Secretary reports matters arising to the
Audit Committee and the Board during the
course of the year. Further details as to the
Group’s whistle-blowing arrangements are
provided on page 75.
During the year 8,678 people in the US, 703
people in Canada and 779 people in the UK
underwent induction training. In addition,
training programmes were undertaken in
safety and business ethics.
Ashtead Group plc Annual Report & Accounts 2023
44
Principal risks and uncertainties continued
Assessment of prospects
andviability
The prospects of the Group are inherently
linked to the environment in which we
operate. While our principal market is
construction, which is cyclical in nature, it
represents less than 50% of our business.
The balance is non-construction related
activity, including, inter alia, industrial,
events, maintenance and repair,
emergency response and facilities
management which, by their nature,
aretypically less cyclical.
Our markets in the US and Canada are
undergoing structural change. Customers
are increasingly choosing to rent
equipment rather than own it and the
fragmented markets are consolidating.
The Group is well positioned to take
advantage of these structural changes.
The UK market is more mature and
competitive than the US and Canada but
Sunbelt UK is the largest rental company
in that market and, with the Group’s strong
financial position, is well positioned to
optimise market conditions.
Period of assessment
The Board discusses regularly the factors
affecting the Group’s prospects and the
risks it faces in optimising the opportunity
presented in its markets. The principal
risks, which the Board concluded could
affect the business are set out on the
preceding pages. The Group’s risks are
ongoing in nature and therefore could
crystallise at any time, rather than being
linked to a specific timeframe. While the
Board has no reason to believe the Group
will not be viable over a longer period, the
period over which the Board considers it
possible to form a reasonable expectation
as to the Group’s longer-term viability, is
the three-year period to 30 April 2026.
This also aligns with the duration of the
business plan prepared annually and
reviewed by the Board. We believe this
provides a reasonable degree of
confidence over this longer-term outlook.
Assessment of viability
The Group prepares an annual budget and
three-year business plan. This plan
considers the Group’s cash flows and is
used to review its funding arrangements
and available liquidity based on expected
market conditions, capital expenditure
plans, used equipment values and other
factors that might affect liquidity. It also
considers the ability of the Group to raise
finance and deploy capital.
The nature of the Group’s business is such
that its cash flows are countercyclical. In
times of improving markets, the Group
invests in its rental fleet, both to replace
existing fleet and grow the overall size of
the fleet, which results in improving
earnings but lower cash flow generation
from operations in times of rapid growth.
However, as the cycle matures and the
rate of growth slows, the Group generates
strong cash flow from operations. In more
benign or declining markets, the Group
invests less in its rental fleet and, as a
result, generates significant cash flow
from operations.
Recognising the impact of the economic
cycle and the risk of an economic
downturn on the business and its financing
requirements, we undertake scenario
planning based on the timing, severity and
duration of any downturn and subsequent
recovery. This scenario planning considers
the impact of the cycle on revenue,
margins, capital expenditure, cash flows,
overall debt levels and leverage. The Group
maintains a net debt to EBITDA leverage
target range of 1.5 to 2.0 times (pre IFRS
16)and long debt maturities to mitigate
financing risk. Our committed borrowing
facilities do not mature before the end
ofthe viability assessment period and
webelieve the Group’s financial profile
andcapital structure will enable the
Grouptocontinue to access debt
marketsas required.
Based on this analysis, and the Board’s
regular monitoring and review of risk
management and internal control
systems, we do not believe there are any
reasonably foreseeable events that could
not be mitigated through the Group’s
ability to flex its capital expenditure plans
and cost base, which would result in the
Group not being able to meet its liabilities
as they fall due. The nature of the
business’ other principal risks is such
that, while they could affect the Group’s
ability to achieve its objectives, they are
unlikely to prevent the Group from
meeting its liabilities as they fall due.
Viability statement
Based on the foregoing, the Board has a
reasonable expectation that the Group will
be able to continue in operation and meet
its liabilities as they fall due over the
period to 30 April 2026.
Emerging risks
In addition to the principal risks identified
above, the Board considers what
emerging risks may also impact the
Group. In identifying emerging risks, the
Board has considered both third-party
risk analysis as well as internal views of
emerging trends which may impact the
business. As a result of this analysis,
theBoard specifically considered supply
chain constraints, climate-related
matters and emerging technologies,
including battery-led technologies and
autonomousmachines.
In relation to our supply chain, we work
with industry-leading rental equipment
manufacturers and have achieved
significant competitive advantages,
including cost savings, through our scale
and working relationships. Across the
Group, our top five suppliers now account
for c. 50% of our rental capital
expenditure and, in most cases, we are
larger than our suppliers. There is a risk
that our key suppliers are unable to
supply the equipment required to meet
our replacement and growth
requirements in a timely manner. The
Board believes that the Group has
sufficient alternative sources of supply
and inherent flexibility in its business
model and a $16bn rental fleet, if a
supplier is unable to deliver equipment
asscheduled. However, it acknowledges
that transitioning to a new principal
supplier could cause short-term
disruption to our procurement.
In relation to climate-related matters,
theBoard believes these are addressed
principally through our environmental
risk and our commitment to reduce our
carbon intensity, but notes that this is a
developing area and as such continues to
monitor the ways in which climate change
may affect the Group in the future. On
balance, the Board believes that the
impact from climate change and
emerging technologies will increase the
demand forrental and continue the shift
from ownership to rental, rather than
presenting a risk to our business model.
Ashtead Group plc Annual Report & Accounts 2023
45
STRATEGIC REPORT
ADVANCE
TECHNOLOGY
3
Make the move from industry-leading
technology platform, to a leader among
the broader industrial and service sector;
further improving our customer value
proposition and capturing the benefits of
scale across the Group.
c.60%
of orders delivered
within 24 hours
Sunbelt 3.0 technology roadmap to deliver an integrated suite of
tools and applications to enhance the customer experience and
deliver operational efficiency.
Increasing use of telematics data to generate operational
efficiencies, enhance preventative maintenance and provide
operational data to customers.
Increased uptake of automatic tagging of equipment and operators
to keep track of fleet from on-site rental stores.
2023 highlights
Ashtead Group plc Annual Report & Accounts 2023
46
Advance technology
We use IT infrastructure in our operations to help reduce
waste and improve sustainability, such as connecting all
ourrental assets together through Internet of Things (‘IoT’)
devices. We have invested heavily in these devices to ensure
that in the near future, almost all of our assets will be
connected back toour technology platform. This not only
helps us understand the utilisation of the asset but also
enables us to be predictive about its maintenance. We want
torepair it or swap it out before it fails, not after.
A robust focus on connectivity and interoperability is key for
making it all work together. We are redeveloping software and
microservices to deliver our strategic concept of connected
assets, connected people, and connected operations. We
arealso leveraging artificial intelligence (‘AI’) and machine
learning algorithms to optimise rental logistics. Logistics
andtransportation can have a huge impact on sustainability
through improving efficiency. AI machine learning helps
ensure the right equipment gets to the right drivers and
enables better fuel efficiency en route. Fewer miles equals
asmaller carbon footprint and less wear and tear.
47
Ashtead Group plc Annual Report & Accounts 2023
STRATEGIC REPORT
Engaging actively with our stakeholders is
critical to the success of the Group and the
Group engages regularly with stakeholders
on a variety of topics relevant to the
business.
A high degree of delegation of the
engagement with stakeholders to the
management teams within the Group exists
in order to ensure the smooth operation of
the Group on a day-to-day basis. As noted
within our Corporate governance report, the
role of the Board is to provide a framework
under which the Group operates but under
which the Group’s businesses have freedom
and decision-making authority to pursue
business opportunities, underpinned by the
culture of the Group. The directors believe
that this is an important factor inthe
operation of the Group and the Group’s
overall success.
Authority for the operational management of
the Group’s businesses is therefore
delegated to the chief executive, or further
delegated by him to the senior management
teams within the Group. This ensures
effective day-to-day operation of the Group
while maintaining effective governance.
At a board level, Board members are
encouraged to engage with our stakeholders
directly, for example through meeting with
individual employees during site visits or
through investor meetings, such as those to
obtain remuneration policy feedback or
through attendance at the Group’s annual
general meeting. In addition, the Board
receives feedback from management as to
stakeholder views. This occurs in a number
of ways including through board reports,
investor feedback reports from our brokers
and employee survey reports. An example of
board level engagement has been illustrated
in the case study on page 49 focusing on the
Board’s engagement with our people.
In relation to the Group’s overall
engagement with stakeholders, the Group
has identified the following groups as being
fundamental to the success of the Group:
Definition
− Existing and prospective employees,
including apprentices
Why relevant?
Our employees want to work for a company
which values them, provides ongoing
development, treats them fairly and
remunerates them appropriately. Investing
in our people ensures we maintain our
culture by having the right people and
enables us to deliver on our strategic goals.
Nature of engagement
− Employee engagement apps
− Regular ‘toolbox talks’ and ‘town hall’
meetings
− Employee surveys
− National conferences, leadership team
meetings and other employee events
− Regular communication on safety,
withdedicated safety weeks
− Training programmes
− Apprentice programmes
− Employee relief programme
Further details are provided on pages 62to
67.
Our response to engagement
− Employee reward and benefit structure
which recognises the contribution
ouremployees make to the success ofthe
business
− Employee policies which ensure our
people are treated fairly
− Ensuring safety remains a cornerstone of
our culture
− Continued focus on diversity, equity and
inclusion (‘DEI’) across the Group, with DEI
taskforces in place in North America and
the UK
Relevant KPIs
− Employee survey scores
− Safety metrics
− Employee retention metrics
Definition
− National and other managed accounts
− Small and mid-sized enterprises
− Individuals
Why relevant?
Our customers want to have confidence
inthe ‘Availability, Reliability and Ease’
ofour offering as a reliable alternative
toownership.
Nature of engagement
− Account managers for major customers
− Customer feedback mechanism
− Store level staff with local customer
relationships
− Customer centric technology to facilitate
customer engagement
− Customer focused websites
Our response to engagement
− Continued investment in fleet, including
greener rental options where we are
working with customers and suppliers to
develop new technologies
− Investment in new market offerings
tobroaden our rental offering
− Continued investment in customer
focused technology solutions, including
launch of new customer eCommerce
websites and apps
Relevant KPIs
− Customer satisfaction scores
− Level of repeat business
− Customer spend
− Debtor days/days to credit
Our
people
Our
customers
Ashtead Group plc Annual Report & Accounts 2023
48
STAKEHOLDER ENGAGEMENT
BOARD LEVEL
ENGAGEMENT
Stakeholders most impacted:
− Employees
− Customers
− Suppliers
− Investors
Consideration:
Our October Board meeting held at the US
support office in Fort Mill, South Carolina
represented the mid-point of Sunbelt 3.0. It
presented an ideal opportunity for the Board
to receive a detailed update on progress
across all Sunbelt 3.0 Actionable Components
from senior leadership across the Group.
This meeting occurred shortly after the
announcement of the Chips and Science Act
and the Inflation Reduction Act. The Board
received a detailed assessment of the
implications of the Acts for construction
activity from the Chief Economist at Dodge
Data & Analytics and our in-house experts.
This detailed insight assisted the Board as it
considered capital allocation decisions,
particularly in regard to the rental fleet, as we
entered the next budgetary cycle.
The Board received updates on market
dynamics including supply chain constraints,
inflation and skilled trade scarcity, and their
impact on the business and management’s
response. In addition, it was provided with
sight of initiatives such as markets of
excellence and the advancement of
technology that will provide the foundation for
Sunbelt 4.0.
Board members had the opportunity to
explore each topic in detail and assess the
impact on the Group’s key stakeholders and
the long-term sustainable success of the
business, both formally and informally with
leadership from across the Group.
Definition
− Major equipment suppliers
− Other equipment suppliers
− Service providers
Why relevant?
Partnering with our suppliers in a
collaborative manner ensures that we
haveaccess to equipment when we need
itand enables us to deliver new innovation
tothe market.
Nature of engagement
− Dedicated account managers for
majorsuppliers
− Central procurement teams manage
supplier relationships
− Collaboration to develop and pilot new
technologies, including making targeted
investments where appropriate to support
the development of greener technology
Our response to engagement
− Regular meetings with key suppliers to
assist in management of production cycles
− Policies in place in relation to working with
our suppliers fairly
− Clear procurement terms agreed
Relevant KPIs
− Payment practices statistics
Definition
− Local communities to our operations
− Families of employees
Why relevant?
We want to make a positive contribution
tothe communities in which we operate.
Establishing the right relationships with
ourcommunities also helps us to attract
thebest talent into our business. Supporting
the families of our staff is just the right thing
to do.
Nature of engagement
− Nationwide programmes in addition to
local community initiatives entered into
byindividual depots
− Responding to community needs for
emergency relief
− Charity partnerships which support
ourcommunities
Further details are provided on pages 72
to74.
Our response to engagement
− Community building activities
− Disaster response when required
− Financial support at time of crisis
− Provision of rental equipment
Relevant KPIs
− Charitable donations
− Employee time contributed to
communityinitiatives
Definition
− Shareholders (institutional)
− Shareholders (private)
− Financial lending institutions
Why relevant?
Our investors want to understand how we
are managing the business to generate
sustainable returns through the cycle and to
promote the long-term success of the Group.
Nature of engagement
− Investor conferences
− One-to-one meetings
− Site visits
− Annual Report and other communications
− Results presentations and
bondholdercalls
− Reporting to financial lending institutions
− Annual General Meeting
− Ashtead Group website including investor
relations section
Further details are provided on pages 91 to 92.
Our response to engagement
− Communication of business model and
strategic plan
− Application of stated capital allocation
priorities
− Maintain compliance with stated financial
objectives (e.g. leverage range, etc.)
− Manage business through the cycle
Relevant KPIs
− Returns to shareholders
Our
suppliers
Our
communities
Our
investors
Ashtead Group plc Annual Report & Accounts 2023
49
STRATEGIC REPORT
Statement by the directors in
performance of their
statutory duty in accordance
with s172(1) of the Companies
Act 2006.
The Board of directors of Ashtead Group
plc considers that it has, both
individually and collectively, acted in
good faith in a way which would most
likely promote the success of the
Company for the benefit of the members
as a whole, and in doing so have had
regard (amongst other matters) to
factors (a) to (f) as set out in s172(1) of
the Companies Act 2006 for the
decisions taken during the year ended
30 April 2023. In making this statement,
the directors have considered the
following matters:
− the likely consequences of any
decision in the long-term: the Board
monitored progress against the
Group’s strategy, Sunbelt 3.0, as
disclosed on pages 28 to 35, during
the year and concluded that it will
support the long-term success of the
Company. Shorter term expectations
in supporting that strategy are
approved by the Board as part of the
annual budgeting process, against
which the performance of the Group
is then monitored. Decisions taken
during the year are made in the
context of the Group’s strategy in
order to ensure that they are
consistent with that strategy, take
account of the Group’s principal risks
as described on pages 40 to 45 and
are in line with the Group’s capital
allocation policy, which is designed to
support long-term value generation
for all stakeholders as detailed on
page 35 and is reflected in the Board’s
assessment of viability as described
on page 45;
− the interests of the Company’s
employees: our people are critical to
the success of our business and a core
component of our business model. We
endeavour to recruit the best people,
train them well and look after them so
that they provide the best possible
service for our customers and remain
with us for the long-term. The Board
has ultimate responsibility for ensuring
the Group’s decisions consider the
interests of our employees. Further
details and examples of our activities
with employees are provided on page
42 of the Strategic report and pages
62to 67 of the Responsible business
report;
− the need to foster the Company’s
business relationships with
suppliers, customers and others:
managing the Company’s
relationships with suppliers and
customers is critical in ensuring the
Company delivers on its strategy. We
dedicate account teams to our
national customers to ensure that we
maintain an ongoing dialogue while
local customers are managed at a
store level to enable us to respond at
all levels of the organisation
appropriately. The Board receives
regular updates on our relationships
with suppliers and customers, and
has ultimate responsibility for
approving investments made. Further
details and examples of our activities
with suppliers and customers are
provided on pages 48 to 49 of the
Strategic report;
− the impact of the Company’s
operations on the community and
the environment: the Group seeks
tohave a positive impact on the
communities in which it operates
andminimise the environmental
impact of our operations. Examples
of our community initiatives and
theenvironmental steps we take
areprovided in further detail on
pages 72 to 74 of the Responsible
business report and pages 76 to 81
ofthe Task Force on Climate-related
Financial Disclosures;
− the desirability of the Company
maintaining a reputation for high
standards of business conduct: the
Group regularly reviews and updates,
where appropriate, its business
conduct and ethics policies and
ensures that these are communicated
to employees, are readily available to
employees, customers and suppliers
and that appropriate training is
undertaken by relevant employees on
a regular basis to reinforce the
Group’s policies. The Group business
ethics and conduct policy is formally
reviewed and approved by the Board
on an annual basis and available on
the Group’s website, while employee
specific policies are provided in
employee handbooks available to
team members. Further details are
provided on page 75 of the
Responsible business report and on
page 90 of the Corporate governance
report; and
− the need to act fairly as between
members of the Company: the
Company always seeks to ensure that
its communications are transparent
and its actions are in accordance with
the Group’s stated strategic aims to
promote the long-term success of the
Company. On pages 91 to 92 within the
Corporate governance report we detail
how we engage with our shareholders,
including both institutional investors
and private investors.
Ashtead Group plc Annual Report & Accounts 2023
50
SECTION 172 STATEMENT
Revenue EBITDA Profit
1
2023 2022 2023 2022 2023 2022
UK in £m 684.8 725.7 192.2 214.6 65.0 86.8
Canada in C$m 827.1 626.0 337.0 281.4 167.4 143.6
US 8,222.4 6,477.0 3,955.3 3,120.6 2,464.7 1,852.3
UK in $m 822.8 986.3 231.0 291.7 78.1 118.0
Canada in $m 622.1 499.0 253.5 224.3 125.9 114.4
Group central costs – – (28.0) (27.2) (29.0) (28.3)
9,667.3 7,962.3 4,411.8 3,609.4
2,639.7 2,056.4
Net financing costs (366.2) (232.6)
Adjusted profit before tax 2,273.5 1,823.8
Amortisation (117.7) (108.6)
Exceptional items – (47.1)
Profit before taxation 2,155.8 1,668.1
Taxation charge (538.1) (417.0)
Profit attributable to equity holders of the Company 1,617.7 1,251.1
Margins
US 48.1% 48.2% 30.0% 28.6%
UK 28.1% 29.6% 9.5% 12.0%
Canada 40.7% 45.0% 20.2% 22.9%
Group 45.6% 45.3% 27.3% 25.8%
1 Segment result presented is adjusted operating profit.
Throughout the Financial review, we use a number of alternative financial performance measures (‘APMs’) which the directors have adopted in order to provide additional
useful information on the underlying trends, performance and position of the Group. Further details are provided in the Glossary of terms on page 174.
The UK business generated rental only
revenue of £429m, up 6% on the prior year
(2022: £403m). Excluding the impact of the
work for the Department of Health, which
ended during the first quarter of 2022/23,
rental only revenue increased 22%.
Bolt-ons since 1 May 2021 contributed 9%
of this growth. Rental revenue increased
3% to £559m (2022: £544m) or 26%
excluding the impact of the work for the
Department of Health. Total revenue
decreased 6% to £685m (2022: £726m)
reflecting the high level of sales revenue
associated with the work for the
Department of Health, which overall
accounted for only c. 4% of revenue in the
year, compared with c. 30% of revenue
last year.
Canada’s rental only revenue increased
20% to C$548m (2022: C$456m). Markets
are robust and the major part of the
Canadian business is growing in a similar
manner to the US with strong volume
growth and rate improvement, in a good
rate environment. The lighting, grip and
lens business was affected by market
uncertainty, with the threat earlier this
financial year of strikes by production staff
in Vancouver, resulting in productions
Our financial performance
Group revenue increased 21% (24% at
constant currency) to $9,667m during the
year (2022: $7,962m). This revenue growth,
combined with strong operational
execution, resulted in adjusted profit
before tax increasing 25% to $2,273m
(2022: $1,824m).
In the US, rental only revenue of $5,879m
(2022: $4,782m) was 23% higher than the
prior year, representing continued market
outperformance and demonstrating the
benefits of our strategy of growing our
Specialty businesses and broadening our
end markets. Organic growth (same-store
and greenfields) was 18%, while bolt-ons
since 1 May 2021 contributed 5% of rental
only revenue growth. In the year, our
General Tool business grew 21%, while
our Specialty businesses grew 29%.
Rental only revenue growth has been
driven by both volume and rate
improvement in what continues to be a
good rate environment. Rental revenue
increased 24% to $7,503m (2022:
$6,042m). US total revenue, including new
and used equipment, merchandise and
consumable sales, increased 27% to
$8,222m (2022: $6,477m).
being delayed or moved elsewhere. Rental
revenue increased 22% to C$696m (2022:
C$569m), while Canada’s total revenue
was C$827m (2022: C$626m).
In common with many businesses, we
have faced inflationary pressures across
most cost lines, but particularly in relation
to labour, transportation and fuel.
However, our strong performance on rate,
combined with operating efficiencies and
inherent economies of scale, has enabled
us to navigate this inflationary
environment, driving strong revenue and
profit growth in the US. As expected, US
rental revenue drop through to EBITDA
has improved as we have progressed
through the year, and in the fourth quarter
was 54%, resulting in drop through of 50%
for the year. This contributed to an EBITDA
margin of 48.1% (2022: 48.2%) and a 33%
increase in segment profit to $2,465m
(2022: $1,852m) at a margin of 30.0%
(2022: 28.6%).
Ashtead Group plc Annual Report & Accounts 2023
51
STRATEGIC REPORT
FINANCIAL REVIEW
The UK remains focused on delivering
operational efficiency and improving
returns in the business. However, this
yearhas been one of transition as we
redeployed assets dedicated to the
Department of Health testing centres
elsewhere in the business, resulting in
lower fleet utilisation than last year. While
we have managed to improve rental rates
during the year, this has been insufficient
to offset the inflation impact on the cost
base. These factors, combined with a
£4mcharge to impair a convertible loan
note due from Britishvolt, which entered
administration in January, contributed to
the UK generating an EBITDA margin of
28.1% (2022: 29.6%) and a segment profit
of £65m (2022: £87m) at a margin of 9.5%
(2022: 12.0%).
Our Canadian business continues to
develop and enhance its performance
asitinvests to expand its network and
broaden its markets. However, this
ongoing investment, including
greenfields, acquisitions and the
infrastructure of the business, combined
with drag from the lighting, grip and lens
business, contributed to an EBITDA
margin of 40.7% (2022: 45.0%) and a
segment profit of C$167m (2022: C$144m)
at a margin of 20.2% (2022: 22.9%).
Overall, Group adjusted operating profit
increased to $2,640m (2022: $2,056m),
up29% at constant exchange rates. After
increased net financing costs of $366m
(2022: $233m), reflecting higher average
debt levels and the higher interest rate
environment, Group adjusted profit before
tax was $2,273m (2022: $1,824m).
Statutory profit before tax was $2,156m
(2022: $1,668m). This is after amortisation
of $118m (2022: $109m) and, in the prior
year, exceptional interest costs of $47m.
Taxation
Tax charge for the year
The adjusted tax charge for the year was
$568m (2022: $456m), representing an
effective rate of 25% (2022: 25%) of
adjusted pre-tax profit of $2,273m (2022:
$1,824m). The cash tax charge was 13%.
Included within the total tax charge is a tax
credit of $30m (2022: $39m) which relates
to the amortisation of intangibles and,
inthe prior year, exceptional items.
Tax strategy and governance
The Group believes it has a corporate
responsibility to act with integrity in all tax
matters. It is the Group’s policy to comply
with all relevant tax laws, regulations and
obligations including claiming available
tax incentives and reliefs in the countries
in which it operates. The Group’s appetite
for tax risk is considered to be cautious
and this policy has remained unchanged
for a number of years. This approach to
taxation is reviewed and approved by the
Board on a periodic basis.
While the Board retains ultimate
responsibility for the tax affairs of the
Group, we have a dedicated internal tax
function which takes day-to-day
responsibility for the Group’s tax affairs.
Inaddition, we seek regular professional
advice to ensure that we remain in
compliance with changes in tax legislation,
disclosure requirements and best practice.
Tax risks are monitored on an ongoing
basis and tax matters are reported to the
Audit Committee as part of our routine
reporting on a quarterly basis.
The Group is committed to having a
transparent and constructive working
relationship with all tax authorities,
including seeking to obtain agreement
from tax authorities prior to undertaking
material transactions where there is a
degree of uncertainty surrounding the
appropriate tax treatment.
Legislative changes
We continue to monitor developments in
the OECD’s work on Base Erosion and
Profit Shifting (‘BEPS’) to ensure
continued compliance in an ever-changing
environment. In December 2021, the OECD
published a framework for the proposed
Pillar Two model rules which would
introduce a global minimum corporation
tax rate of 15% for groups with global
revenues of over €750m. We do not expect
that the 15% global minimum tax rate
would affect materially the amount of tax
the Group pays, as corporation tax rates in
the jurisdictions in which the Group
operates exceed 15%. We continue to
follow the guidance issued and other
developments closely.
Following its state aid investigation, in
April 2019 the European Commission
announced its decision that the Group
Financing Exemption in the UK
controlledforeign company (‘CFC’)
legislation constitutes state aid in some
circumstances. In common with the
UKGovernment and other UK-based
international companies, the Group
doesnot agree with the decision and
hastherefore lodged a formal appeal
withthe General Court of the European
Union. Incommon with other UK
taxpayers, the Group’s appeal was stayed
while the appeals put forward by the UK
Government and ITV plc proceeded.
On 8 June 2022 the General Court of the
European Union dismissed the appeals
put forward by the UK Government and
ITV plc. However, there remains a high
degree of uncertainty in the final outcome
given the UK Government and ITV plc have
both appealed against the decision to the
EU Court of Justice. The Group will
continue to monitor proceedings closely.
Despite the UK Government appealing the
European Commission’s decision, Her
Majesty’s Revenue & Customs (‘HMRC’)
was required to make an assessment of
the tax liability which would arise if the
decision is not successfully appealed and
collect that amount from taxpayers.
HMRC issued a charging notice stating
that the tax liability it believes to be due on
this basis is £36m, including interest
payable. The Group has appealed the
charging notice and has settled the
amount assessed on it, including interest,
in line with HMRC requirements. On
successful appeal in whole or in part, all
or part of the amount paid in accordance
with the charging notice would be
returned to the Group. The £36m ($45m at
April 2023 exchange rates) paid has been
recognised as a non-current asset on the
balance sheet. If either the decision
reached by the General Court of the
European Union or the charging notice
issued by HMRC are not ultimately
appealed successfully, we have estimated
the Group’s maximum potential liability to
be £36m as at 30 April 2023 ($45m at April
2023 exchange rates), including any
interest payable. Based on the current
status of proceedings, we have concluded
that no provision is required in relation to
this matter.
Financial review continued
Ashtead Group plc Annual Report & Accounts 2023
52
Total tax contribution
For the year ended 30 April 2023, total
taxes paid by the Group were $1,494m,
comprising taxes borne by the Group of
$549m and taxes collected on behalf of
taxauthorities of $945m.
Taxes borne by the Group by type of tax
As a profitable group, the majority of taxes
borne by the Group relate to taxes paid on
profits. The $287m net tax paid on profits
(as shown in the consolidated cash flow
statement for the year ended 30 April
2023) is higher than the $283m current tax
charge for the year (as shown in Note 7 to
the consolidated financial statements).
This is because payments made during
the year are generally based on estimates
of the full year tax liability in each
jurisdiction, which can differ to the tax
charge for the year calculated once the
Group’s results are known.
Taxes borne by the Group
by type of tax
1
2
3
4
Type of tax
1 Profit $287m 52%
2 People $153m 28%
3 Property $65m 12%
4 Product $44m 8%
$549m 100%
Given the Group’s large number of
employees, significant employer social
security contribution payments are
madeduring the year. The Group also
pays property taxes and business rates
inrelation to the extensive network of
stores from which it operates. Product
taxes include use tax on certain
purchases made in the US and fuel
andexcise duties associated with the
Group’sfleet of vehicles.
Taxes collected of $945m comprise
$501mof net sales taxes on the products
and services we provide to customers
and$444m in relation to taxes and social
security contributions withheld on behalf
of our employees.
Taxes by jurisdiction
The Group’s operations are based in the
locations and jurisdictions necessary to
best serve our customers and the Group
pays tax in accordance with relevant tax
laws and regulations in those jurisdictions.
As with the split of the Group’s revenue,
the majority of taxes borne and collected
have been paid in the US.
Taxes collected on behalf of
tax authorities by jurisdiction
1
2
3
1 US 84%
2 UK 9%
3 Canada 7%
Taxes borne by the Group
by jurisdiction
1
2
3
1 US 80%
2 UK 14%
3 Canada 6%
Earnings per share
Adjusted earnings per share were up
27%at 388.5¢ (2022: 307.1¢) while basic
earnings per share were up 31% at 368.4¢
(2022: 280.9¢). Details of these
calculations are included in Note 8 to
thefinancial statements.
Return on investment
The Group return on investment was
19%(2022: 18%). In the US, return on
investment (excluding goodwill and
intangible assets) was 27% (2022: 25%),
while in the UK it was 9% (2022: 14%).
Thedecrease in the UK reflects reduced
volumes, particularly service and sales,
supporting the Department of Health as
wehave demobilised testing sites, and
thelower profit margin. In Canada, return
on investment (excluding goodwill and
intangible assets) was 18% (2022: 20%).
This reduction reflects predominantly the
drag from the recent performance of our
lighting, grip and lens business. Return on
investment excludes the impact of IFRS 16.
01 Taxes borne by the Group by jurisdiction
$m Revenue Tax collected Tax borne
US 85% 791 84% 441 80%
UK 9% 89 9% 76 14%
Canada 6% 65 7% 32 6%
100% 945 100% 549 100%
Ashtead Group plc Annual Report & Accounts 2023
53
STRATEGIC REPORT
Balance sheet
Property, plant and equipment
Capital expenditure in the year totalled
$3,772m (2022: $2,397m) with $3,262m
invested in the rental fleet (2022: $1,999m).
Expenditure on rental equipment was
86%of total capital expenditure with the
balance relating to the delivery vehicle
fleet, property improvements and IT
equipment. Capital expenditure by
divisionis shown in Table 02 below.
In a strong US rental market, $1,548m of
rental equipment capital expenditure was
spent on growth while $1,329m was
invested in replacement of existing fleet.
The growth proportion is estimated based
on the assumption that replacement
capital expenditure in any period is equal
to the original cost of equipment sold.
The average age of the Group’s serialised
rental equipment, which constitutes the
substantial majority of our fleet, at 30 April
2023 was 35 months (2022: 40 months)
ona net book value basis. The US fleet
hadan average age of 35 months (2022:
41months), the UK fleet had an average
age of 36 months (2022: 37 months) and
the Canadian fleet had an average age
of35 months (2022: 36 months).
Dollar utilisation was 61% in the US (2022:
57%), 53% for the UK (2022: 58%) and 55%
for Canada (2022: 55%). The improvement
in US dollar utilisation reflects the
improved rate environment while in the
UK, the decrease reflects the lower level
of ancillary revenue due to the reduction
inDepartment of Health work. In Canada,
dollar utilisation benefitted from a good
rate environment but suffered from the
drag of the lighting, lens and grip
business.
Trade receivables
Receivable days at 30 April 2023 were 48
days (2022: 47 days). The bad debt charge
for the last 12 months ended 30 April 2023
as a percentage of total turnover was 0.5%
(2022: 0.4%). Trade receivables at 30 April
2023 of $1,385m (2022: $1,174m) are
stated net of allowances for bad debts and
credit notes of $107m (2022: $86m), with
the provision representing 7% (2022: 7%)
of gross receivables.
Other non-current assets
Included within ‘other non-current assets’
are financial assets investments of $41m
(April 2022: $40m). These represent two
targeted investments in early
development-stage companies, which
have been made in the US as part of the
Group’s activity to support the transition
toa lower carbon economy. These
financial asset investments are Level 3
financial assets where the fair value is
estimated based on the latest transaction
price and any subsequent investment-
specific factors or events.
In the year, the Group made one new
investment, namely Britishvolt ($42m;
£34m), a UK company involved in the
development of electric vehicle battery
technology. In January 2023, Britishvolt
entered administration following failure to
secure additional funding and as a result,
the Group estimated the fair value of its
investment as $nil and consequently
recognised in the third quarter a
movement in the fair value of the equity
component of its investment ($37m; £30m)
through other comprehensive income and
an impairment of the $5m (£4m)
convertible loan component through
theincome statement.
Trade and other payables
Group payable days were 43 days at 30
April 2023 (2022: 43 days) with capital
expenditure related payables totalling
$606m (2022: $363m). Payment periods
for purchases other than rental equipment
vary between seven and 60 days and for
rental equipment between 30 and 120 days.
02 Capital expenditure
2023 2022
Replacement Growth Total Total
UK in £m 127.8 33.2 161.0 158.1
Canada in C$m 80.8 173.4 254.2 200.5
US 1,329.5 1,548.0 2,877.5 1,624.6
UK in $m 153.5 39.9 193.4 214.8
Canada in $m 60.8 130.4 191.2 159.8
Total rental equipment 1,543.8 1,718.3 3,262.1 1,999.2
Delivery vehicles, property improvements & IT equipment 510.0 398.1
Total additions 3,772.1 2,397.3
03 Fleet and utilisation
Rental fleet at original cost
LTM rental
revenue
LTM dollar
utilisation30 April 2023 30 April 2022 LTM average
UK in £m 1,081 988 1,049 559 53%
Canada in C$m 1,438 1,116 1,277 696 55%
US 13,407 11,425 12,381 7,503 61%
UK in $m 1,358 1,241 1,260 672 53%
Canada in $m 1,061 873 961 523 55%
15,826 13,539 14,602 8,698
Financial review continued
Ashtead Group plc Annual Report & Accounts 2023
54
Provisions
Provisions of $155m (2022: $137m) relate
predominantly to the provision for
uninsured risk and acquisition-related
contingent consideration. The Group’s
business exposes it to the risk of claims for
personal injury, death or property damage
resulting from the use of the equipment it
rents and from injuries caused in motor
vehicle accidents in which its vehicles are
involved. The Group carries insurance
covering a wide range of potential claims
atlevels it believes are sufficient to cover
existing and future claims.
Our US liability insurance programmes
provide that we can recover our liability
related to each and every valid claim in
excess of an agreed excess amount of
$2m in relation to general liability and
workers’ compensation and $3m in
relation to motor vehicle claims. In the
UK our self-insured excess per claim
ismuch lower than in the US and is
typically£50,000 per claim. Our liability
insurance coverage is limited to a
maximum of £175m.
Pensions
The Group operates a number of pension
plans for the benefit of employees, for
which the overall charge included in the
financial statements was $40m (2022:
$34m). Amongst these, the Group has one
defined benefit pension plan which was
closed to new members in 2001 and
closed to future benefit accrual in October
2020. All our ongoing pension plans are
defined contribution plans.
The Group’s defined benefit pension plan,
measured in accordance with the
accounting standard IAS 19, Employee
Benefits, was $18m in surplus at 30 April
2023 (2022: $19m). The investment return
on plan assets was $36m lower than the
expected return while a net actuarial gain
of $33m arose, predominantly due to the
increase in the discount rate assumption.
Overall, there was a net remeasurement
loss on the defined benefit pension plan
of$3m which was recognised in the
statement of comprehensive income
forthe year.
The most recent triennial actuarial
valuation was carried out as at 30 April
2022 by a qualified independent actuary
and showed a funding surplus of £11m
($14m at April 2023 exchange rate).
Contingent liabilities
The Group is subject to periodic legal
claims in the ordinary course of its
business, none of which is expected to
have a material impact on the Group’s
financial position. As discussed earlier,
ifthe findings of the European
Commission’s investigations into the
Group Financing Exemption in the UK
controlled foreign company legislation
areupheld, we have estimated the Group’s
potential liability to be £36m ($45m at
April 2023 exchange rate). Based on the
current status of the investigation, we
have concluded that no provision is
required in relation to this amount.
Cash flow
Cash inflow from operations before the
net investment in the rental fleet was
$4,074m (2022: $3,406m). The conversion
ratio for the year was 92% (2022: 94%).
Total payments for capital expenditure
(rental equipment and other PPE) during
the year were $3,530m (2022: $2,164m).
Disposal proceeds received totalled
$615m (2022: $369m), giving net payments
for capital expenditure of $2,915m in the
period (2022: $1,795m). Financing costs
paid totalled $340m (2022: $231m) while
tax payments were $287m (2022: $219m).
Financing costs paid typically differ from
the charge in the income statement due to
the timing of interest payments in the year
and non-cash interest charges. The
exceptional costs in the prior year related
tothe premium on redemption of the senior
notes that were due in 2025 and 2026.
04 Cash flow
Year to 30 April
2023
$m
2022
$m
EBITDA 4,411.8 3,609.4
Cash inflow from operations before changes in rental equipment 4,073.6 3,406.5
Cash conversion ratio* 92.3% 94.4%
Replacement rental capital expenditure (1,380.8) (829.7)
Payments for non-rental capital expenditure (510.0) (398.4)
Rental equipment disposal proceeds 573.6 343.8
Other property, plant and equipment disposal proceeds 41.4 24.8
Tax (net) (287.3) (218.8)
Net financing costs before exceptional items (340.2) (231.1)
Cash inflow before growth capex and payment of exceptional costs 2,170.3 2,097.1
Growth rental capital expenditure (1,638.8) (935.7)
Exceptional costs – (36.0)
Free cash flow 531.5 1,125.4
Business acquisitions (1,083.2) (1,277.4)
Financial asset investments (42.4) (40.0)
Total cash absorbed (594.1) (192.0)
Dividends (357.8) (269.3)
Purchase of own shares by the Company (264.4) (409.6)
Purchase of own shares by the ESOT (12.5) (23.8)
Increase in net debt due to cash flow (1,228.8) (894.7)
* Cash inflow from operations before changes in rental equipment as a percentage of EBITDA.
Ashtead Group plc Annual Report & Accounts 2023
55
STRATEGIC REPORT
Accordingly, the Group generated free
cash flow of $531m (2022: $1,125m) and,
after acquisition and investment related
expenditure of $1,126m (2022: $1,317m), a
net cash outflow of $594m (2022: $192m),
before returns to shareholders.
Acquisition expenditure related to 50
bolt-on acquisitions completed during
theyear as we continue to both expand
ourfootprint and diversify our end
markets. Further details are provided in
Note 27 to the financial statements.
Capital structure and
allocation
The Group’s capital structure is kept
under regular review. Our operations are
financed by a combination of debt and
equity. We seek to minimise the cost of
capital while recognising the constraints
of the debt and equity markets. At 30 April
2023 our average cost of capital was
approximately 10%.
The Group remains disciplined in its
approach to allocation of capital with
theoverriding objective being to enhance
shareholder value. Our capital allocation
framework remains unchanged and
prioritises:
− organic fleet growth;
− same-stores;
− greenfields;
− bolt-on acquisitions; and
− a progressive dividend with
consideration to both profitability and
cash generation that is sustainable
through the cycle.
Additionally, we consider further returns
to shareholders. In this regard, we assess
continuously our medium-term plans
which take account of investment in the
business, growth prospects, cash
generation, net debt and leverage.
Therefore the amount allocated to
buybacks is simply driven by that which
isavailable after organic growth, bolt-on
M&A and dividends, while allowing us to
operate within our 1.5 to 2.0 times target
range for net debt to EBITDA pre IFRS 16.
We spent $675m (£523m) under the
two-year buyback programme which
concluded in April 2023. In May 2023, we
launched a new buyback programme of
upto $500m over the year to April 2024.
Dividends
The Company has a progressive dividend
policy, which considers both profitability
and cash generation, and results in a
dividend that is sustainable across the
cycle. Our intention has always been to
increase the dividend as profits increase
and be able to maintain it when profits
decline. In accordance with this policy,
theBoard is recommending a final
dividend of 85.0¢ per share (2022: 67.5¢)
making 100.0¢ for the year (2022: 80.0¢),
an increase of 25%. If approved at the
forthcoming Annual General Meeting, the
final dividend will be paid on 12 September
2023 to shareholders on the register on
11August 2023.
In determining the level of dividend in any
year, the Board considers a number of
factors that influence the proposed
dividend as detailed above. Ashtead
Group plc, the parent company of the
Group, is a non-trading investment
holding company which derives its
distributable reserves from dividends
paid by subsidiary companies which are
planned on a regular basis to maintain a
suitable level of distributable reserves at
the parent company.
Net debt
Chart 05 shows how net debt and
leverage, measured at constant April 2023
exchange rates, has changed over the
cycle. Since 2010, we have stepped up our
capital expenditure as rental markets
improved. Net debt has increased in
absolute terms over the period due to
acquisitions, dividends and share
buybacks with free cash flow being more
than sufficient to fund the increased
capital expenditure. Since 2013 we have
been operating within our net debt to
EBITDA target leverage range of 1.5 to 2.0
times (excluding IFRS 16). Furthermore,
our overall balance sheet strength
continues to improve with the second-
hand value of our fleet exceeding our total
debt by $4.9bn.
In greater detail, closing net debt at
30April 2023 is set out in Table 06 on
page57.
Net debt at 30 April 2023 was $8,960m
with the increase since 30 April 2022
reflecting the net cash outflow set out
above and additional lease commitments
as we continue our greenfield and bolt-on
expansion. The Group’s EBITDA for the
year ended 30 April 2023 was $4,412m.
Excluding the impact of IFRS 16, the ratio
of net debt to EBITDA was 1.6 times (2022:
1.5 times) on a constant currency and a
reported basis as at 30 April 2023.
Including the impact of IFRS 16, the ratio
of net debt to EBITDA was 2.0 times at
April 2023 (2022: 2.0 times).
Our debt package is well structured for
our business across the economic cycle.
We retain substantial headroom on
facilities which are committed for the
long-term, with an average of six years
remaining at 30 April 2023. The weighted
average interest cost of these facilities
(including non-cash amortisation of
deferred debt raising costs) is 5%.
05 Net debt and leverage
Apr
13
Apr
14
Apr
15
Apr
16
Apr
17
Apr
18
Apr
19
Apr
20
Apr
21
Apr
22
Apr
23
400
1,400
2,400
3,400
4,400
5,400
6,400
7,400
Net debt (excluding IFRS 16) ($m)
Leverage, at constant currency (x)
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Financial review continued
Ashtead Group plc Annual Report & Accounts 2023
56
06 Net debt
2023
$m
2022
$m
First priority senior secured bank debt 2,038.4 2,108.1
1.500% senior notes, due 2026 546.8 545.8
4.375% senior notes, due 2027 595.6 594.8
4.000% senior notes, due 2028 595.1 594.3
4.250% senior notes, due 2029 594.6 593.9
2.450% senior notes, due 2031 743.9 743.2
5.500% senior notes, due 2032 737.8 –
5.550% senior notes, due 2033 742.9 –
Total external borrowings 6,595.1 5,180.1
Lease liabilities 2,394.3 1,995.2
Total gross debt 8,989.4 7,175.3
Cash and cash equivalents (29.9) (15.3)
Total net debt 8,959.5 7,160.0
Debt facilities
The Group’s principal debt facilities are
discussed below.
First priority senior secured credit
facility
At 30 April 2023, $4.5bn was committed by
our senior lenders under the asset-based
senior secured revolving credit facility
(‘ABL facility’) until August 2026. The
amount utilised was $2,152m (including
letters of credit totalling $73m). The ABL
facility is secured by a first priority interest
in substantially all of the Group’s assets.
Pricing for the $4.5bn revolving credit
facility is based on average availability
according to a grid, varying from the
applicable interest rate plus 125bp to
150bp. The applicable interest rate is
based on SOFR for US dollar loans, SONIA
for sterling loans and CDOR for Canadian
dollar loans. At 30 April 2023, the
borrowing rate was the applicable interest
rate plus 150bp.
The only financial performance covenant
under the asset-based first priority senior
bank facility is a fixed charge ratio
(comprising LTM EBITDA before
exceptional items less LTM net capital
expenditure paid in cash over the sum
ofscheduled debt repayments plus cash
interest, cash tax payments and dividends
paid in the last 12 months) which must be
equal to or greater than 1.0 times.
This covenant does not, however, apply
when availability (the difference between
the borrowing base and facility utilisation)
exceeds $450m. At 30 April 2023, the fixed
charge ratio exceeded the covenant
requirement. At 30 April 2023 availability
under the bank facility was $2,573m
($2,537m at 30 April 2022), with an
additional $4,968m of suppressed
availability meaning that the covenant
wasnot measured at 30 April 2023
and isunlikely to be measured in
forthcomingquarters.
Senior notes
At 30 April 2023 the Group, through its
wholly owned subsidiary Ashtead Capital,
Inc., had seven series of senior notes
outstanding. The $550m 1.500% notes are
due on 12 August 2026, the $600m 4.375%
notes are due on 15 August 2027, the
$600m 4.000% notes are due on 1 May
2028, the $600m 4.250% notes are due on
1 November 2029, the $750m 2.450%
notes are due on 12 August 2031, the
$750m 5.500% notes are due on 11 August
2032 and the $750m 5.550% notes are due
on 30 May 2033.
Minimum contracted debt
commitments
Table 07 summarises the maturity of the
Group’s borrowings at 30 April 2023 by
year of expiry.
Except for the Group’s lease
commitments, details of which are
provided in Note 18 to the financial
statements, $73m of standby letters of
credit issued at 30 April 2023 under the
first priority senior debt facility relating to
the Group’s insurance programmes and
$6m of performance bonds granted by
Sunbelt, we have no material
commitments that we could be obligated
to pay in the future which are not included
in the Group’s consolidated balance sheet.
Current trading and outlook
We enter the final year of Sunbelt 3.0
withclear momentum in strong end
markets, which are enhanced by the
increasing number of mega projects and
recent US legislative acts. We are in a
position of strength, with the operational
flexibility and financial capacity to
capitalise on the opportunities arising
from these strong markets and ongoing
structural change. The Board looks to
thefuture with confidence.
07 Minimum contracted debt commitments
2024
$m
2025
$m
2026
$m
2027
$m
2028
$m
Thereafter
$m
Total
$m
Bank and other debt – – – 2,038.4 – – 2,038.4
1.500% senior notes – – – 549.0 – – 549.0
4.375% senior notes – – – – 600.0 – 600.0
4.000% senior notes – – – – – 600.0 600.0
4.250% senior notes – – – – – 600.0 600.0
2.450% senior notes – – – – – 748.4 748.4
5.500% senior notes – – – – – 743.0 743.0
5.550% senior notes – – – – – 748.3 748.3
– – – 2,587.4 600.0 3,439.7 6,627.1
Deferred costs of raising finance – – – (2.2) (4.4) (25.4) (32.0)
Cash at bank and in hand (29.9) – – – – – (29.9)
Net debt (excluding IFRS 16) (29.9) – – 2,585.2 595.6 3,414.3 6,565.2
Ashtead Group plc Annual Report & Accounts 2023
57
STRATEGIC REPORT
LEAD
WITH ESG
4
Embracing responsible sustainability and
success for all our stakeholders, while unlocking
the structural benefits ESG will bring to rental
across the Group.
Engage for Life: Amplified
health and safety culture
Working with key suppliers to
advance greener equipment
Awarded gold military
friendly employer in the US
and gold UK Armed Forces
Covenant in recognition of
our support for the defence
and armed forces community
Continuing support of
Weapons Down, Gloves Up
getting young people off the
streets and into work
30% reduction in carbon
intensity compared with
2017/18
2023 highlights
Top-50
military friendly employer in the US
Read more about our commitment to
ESG and our progress in the Responsible
business report on page 60
58
Ashtead Group plc Annual Report & Accounts 2023
Leading the movement for greener fleet
As the world moves toward a lower carbon future, the pace and
scale of technological developments and adoption greatly
impacts the availability of low-carbon options for vehicles and
rental equipment. For example, currently there is no time tested
and widely available transportation solution to replace our Class
8 heavy duty vehicles. As that technology develops, it will take
time for manufacturing capacity to develop. Renewal of vehicles
and rental equipment must evolve responsibly, as a rapid or
premature changeover of assets would result in a significant
number of assets, and the natural resources consumed in their
production, going to waste.
To address some of these challenges, we are exploring interim
solutions that can work for us and our customers. For example,
HVO (hydrotreated vegetable oil) is an alternative drop-in fuel,
meaning it can be used in an internal combustion diesel engine
with no modifications necessary. Since HVO is not yet widely
available and is costlier in most locations as compared with
regular diesel, we are in dialogue with governmental
stakeholders and suppliers in North America and the UK to
identify ways to make HVO more widely available and affordable.
We are also mapping suppliers aligned to our operations to
identify those markets where we can progress this offering to
customers more rapidly.
59
STRATEGIC REPORT
Ashtead Group plc Annual Report & Accounts 2023
DRIVING REAL
CULTURAL CHANGE
Being a responsible business has
always been a priority for us. We are
passionate about improving the lives
ofour people, contributing in a positive
way to the environment, engaging in
the communities in which we live and
work and ensuring strong governance
for our business.
Embedding ‘Lead with ESG’ as one
ofthe actionable components of our
Sunbelt 3.0 strategy has increased
further our focus and brought about the
incorporation of sustainability thinking
into the culture of the organisation. It
has also given fresh impetus to our
initiatives and programmes. We were
delighted to issue our first standalone
Sustainability report during the course
of this year. This Responsible business
report works alongside the Group’s
more detailed disclosures within the
Sustainability report to provide
information for stakeholders on our
activities on ESG. We expect this year’s
Sustainability report to be published
inAutumn 2023.
How we prioritise ESG
At Ashtead, we have always prioritised
the safety of our people, customers
and members of the communities we
serve. We provide our customers with
a reliable alternative to ownership,
support the communities we serve
across our store network, limit the
environmental impact of our
operations and ensure a strong
governance framework. Our ESG
priorities are to operate in the most
sustainable and responsible way in
allareas of our business.
Lead with ESG is about engagement,
action and results; embracing
responsible sustainability and success
for our people, our customers, our
communities and our investors, while
unlocking structural benefits ESG
willbring through increased rental
penetration. We have analysed the
issues and impacts that are most
important and material to our
businessand stakeholders in our
defined areas of focus as set out
inoursustainability wheel.
Material topics
As part of our risk management process,
we assess regularly the most material
matters to the Group, including those
related to sustainability, and assess their
potential impact on our business and the
generation of long-term value. We have
segmented our commitments into four
key areas: our people; the environment;
our communities; and governance. In
thisResponsible business report we
focus on our people, the environment,
and our communities:
− Our people: health and safety is
fundamental to our culture and is at
the forefront of everything we do,
underpinned by the next phase of our
Engage for Life programme, Engage
for Life: Amplified. Retaining and
attracting good people is key to
delivering superior performance and
customer service and progressing
our culture. A skilled and committed
workforce is fundamental to the
Group’s long-term success and key
to this is treating everyone fairly and
with respect.
− The environment: rental is a prime
example of the circular economy with
significant benefits to the
environment from rental versus
ownership at all stages of the
business life cycle, from supply chain
and operations, to customer use and
end of life of equipment. We
prioritised our environmental
commitment as part of Sunbelt 3.0
todrive performance and enhance
transparency regarding our activities
and achievements.
− Our communities: with our ever
increasing scale, we are present in
many local communities with the
opportunity to be a force for good
through community support, job
creation and recruitment, charity
support, volunteering and responding
to emergencies.
− Governance: we are committed to the
highest standards of governance with
further details provided in this
Responsible business report and the
Corporate governance report.
The Group’s activities help advance the
United Nations Sustainable Development
Goals (SDGs). We have identified the eight
goals to which we believe we can make
the most contribution through our focus
on recruitment and training, focus on
diversity, equity and inclusion, the
development of our products and
management of our operations. Further
details are provided in the Group’s
Sustainability report.
Ashtead Group plc Annual Report & Accounts 2023
60
RESPONSIBLE BUSINESS REPORT
Environmental
opportunities
Human capital
Social
opportunities
Corporate
governance
Corporate
behaviour
Climate
change
Waste
Recruitment
Health &
safety
Community
engagement
Charities
S
O
C
I
A
L
–
O
U
R
P
E
O
P
L
E
S
O
C
I
A
L
–
O
U
R
C
O
M
M
U
N
I
T
I
E
S
E
N
V
I
R
O
N
M
E
N
T
LEAD
WITH ESG
S
O
C
I
A
L
–
O
U
R
P
E
O
P
L
E
E
N
V
I
R
O
N
M
E
N
T
G
O
V
E
R
N
A
N
C
E
S
O
C
I
A
L
–
O
U
R
C
O
M
M
U
N
I
T
I
E
S
How we monitor our work
A robust approach to corporate governance
is the foundation for delivering our strategy
and ensuring our growth is both
responsible and sustainable. The tone
fromthe top, risk management and
transparency are all elements that are
essential to our business performance
andits sustainability. We understand that
identifying metrics in measuring our
performance is important and have a
number that we monitor, including health
and safety incident rates, employee
engagement, staff turnover and carbon
intensity. We report on these in this report.
The Group’s Board of directors is
responsible for monitoring the progress
we make against our strategic ESG
objectives and the targets we have set.
The Board is assisted in this function
bythe Group Risk Committee which is
chaired by our chief financial officer.
Included on the Group Risk Committee
isthe Group’s managing director of ESG.
For further information on the Group Risk
Committee, its members and priorities in
current and forthcoming years, please see
pages 40 to 45.
Ashtead Group plc Annual Report & Accounts 2023
61
STRATEGIC REPORT
OUR PEOPLE
The Group’s success is built on a culture
which places health and safety at its core.
We are committed to improving continually
our safety performance, both in how we
operate and the equipment and services
we provide for customers. We believe that
being recognised for excellence in health
and safety provides us with significant
competitive advantage.
We target safety improvement through
health and safety programmes and
encouraging employees to keep their own
safety and that of their colleagues in mind
at all times. Our safety training for
employees, managers and leaders
reinforces the importance of a safety-first
mindset and we pay particular attention
to‘near misses’ as a way of continuing
tounderstand and focus on safety risks.
All incidents and ‘near misses’ are
investigated and responded to swiftly.
Our health and safety mindset goes
beyond core safety programmes. For
example, our ‘Power Up’ initiative ensures
our employees are ‘ready to go’ every
morning, encouraging our team members
to have a broader view of their wellbeing.
Safety initiatives
We encourage staff to take responsibility
for their own safety and have core safety
processes across all our stores.
Theseinclude:
− our team members are trained
regularly on the safe use of relevant
equipment for their role;
− the near miss programme, which
provides insights into our exposures
across our business;
− the pre-task planning programme (Take
10 Programme), which requires
everyone to take at least 10 seconds to
think through the job they are about to
do using a pre-task planning checklist.
Examples of tasks where this is applied
are loading/unloading, wash bay work,
checking equipment in, and technicians
repairing or conducting routine
maintenance on the equipment;
− the Safety Committee engagement
programme, which ensures stores hold
safety meetings and engage in topics
such as near miss reporting, being
more observant in looking for
exposures, corrective action closure,
etc. Weekly safety communications and
briefings are also issued to all team
members, further encouraging
continual dialogue in relation to safety
matters at all levels of the organisation,
via email and through our employee
engagement app; and
− Regional Safety Managers present in
our business, who engage on a daily
basis with team members. Their role
includes truck inspections, facility
assessments, training and listening
tofeedback from our people.
Our senior leadership teams have weekly
safety meetings to provide focus towards
developing solutions that can be replicated
across the Group. We hold annual safety
weeks designed to increase awareness
ofthe importance of safety across
thebusiness.
Driver and vehicle safety
Our fleet of vehicles drives more than 300
million miles every year delivering our fleet
and servicing the needs of our customers.
Covering this distance means safety on the
road for our drivers and other road users
isparamount. While we have one of the
safest fleets in the equipment rental
industry, we continue to focus on safety
through our commercial vehicle training
programme and defensive driving courses
so we can target ways in which we can
further reduce our incident rate.
Our driver safety programmes use
onboard telematics to help us prevent
unsafe behaviours or activities on the
road. Through this programme, we are
introducing cameras into our delivery and
service vehicles, with c. 1,400 cameras
installed to date. The use of this
technology enables real-time feedback
onbehaviours which could lead to vehicle
incidents (e.g. lane departures, critical
distance or in-cab behaviours). It also
enables recognition of positive actions
anda job well done. While the use of
onboard technologies is designed to
improve driving behaviour, it also provides
incremental benefits through reduced fuel
use, enhanced engine and vehicle
maintenance and fewer accidents. In
addition, drivers participate in online risk
assessments that identify safe and unsafe
behaviours through interactive driving
modules. By identifying the risk profiles of
our drivers, we are able to develop specific
adaptive learning programmes for them.
Engage for Life: Amplified
Our Engage for Life health and safety
programme is built on three pillars:
culture, community and commitment.
Weare focused on building a culture
thateliminates serious injuries or
fatalities (‘SIFs’), aligns our best
practices, and ensures we all have the
right skills to complete work safely. An
important component of Engage for Life
is that we demonstrate the dedication to
the well-being of our team members,
their families and communities, while
supporting and encouraging team
members’ safety development. We were
recognised by the Board of Certified
Safety Professionals (‘BCSP’) as a
Diamond Class Certification Sponsor,
for supporting our team members in
achieving safety certification, with over
185 team members having completed
the programme. This year saw the
launch of Engage for Life in the UK and,
in North America, Engage for Life:
Amplified, taking the programme to the
next level in terms of embedding it
deeper within our culture.
Health
& safety
Ashtead Group plc Annual Report & Accounts 2023
62
Responsible business report continued
How we monitor performance
We monitor and analyse health and safety
incidents and ‘near misses’, investigating
and analysing root causes to help identify
recurrent issues and risks, and implement
preventative controls. The importance of
health and safety is reflected in the fact
that the number of reportable accidents is
one of our group-wide KPIs (see page 39).
We continue to develop and improve our
incident management system which
enables us to manage incidents while
allowing us to investigate, analyse root
causes and track corrective/preventative
actions. The tracking and reporting of
‘near misses’ is an area we are looking
toimprove as the lessons learnt are as
instructive or often more so than from
actual incidents.
This year, the US had 2,036 reported
incidents relative to an average workforce
of 17,902 (2022: 1,326 incidents relative to
an average workforce of 14,934), Canada
has 372 reported incidents relative to an
average workforce of 1,879 (2022: 223
incidents relative to an average workforce
of 1,575) and in the UK there were 190
reported incidents relative to an average
workforce of 4,262 (2022: 193 incidents
relative to an average workforce of 3,947).
For the purpose of our internal tracking,
the term incident does not necessarily
mean our employee was hurt or injured.
Instead, it represents an incident that we
want to track and report for monitoring
and learning purposes.
Reportable incidents are measured
differently in North America and the UK
due to different regulatory frameworks.
Inthe US and Canada, reportable
accidents are reported in accordance
withOSHA (Occupational Safety and
Health Administration), referenced as a
Total Recordable Incident Rate (‘TRIR’)
whereas in the UK, reportable accidents
are reported in accordance with RIDDOR
(Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations).
Under the different definitions, more
incidents are generally identified in
NorthAmerica as being reportable
thaninthe UK.
To compare performance between our
main operating countries we measure
incidents using RIDDOR, as shown in Table
01. All safety and health reporting is made
through our online reporting system.
We remain committed to reducing these
rates as much as possible and continue
tosee progress across the businesses.
In addition to monitoring reportable
incidents, we have developed a set of
performance predictors. These are a set
of six leading indicators that monitor each
month’s activities supporting our safety
culture and performance. The leading
indicators are mostly centred on
engagement and include topics such
assafety meeting attendance, safety
committee participation and defensive
driving programmes. These are recorded
in our online safety reporting system.
Working on safety with our
customers and suppliers
Being a responsible business means
sharing and promoting our safety culture
with our customers and suppliers
whenever possible. We have the highest
safety expectations for all our equipment
suppliers. For our customers, we have
dedicated mobile elevated work platform,
forklift and earth moving operator trainers
and we offer customised training
programmes to fill their needs. We work
with customers’ safety teams to develop
customised training courses, sometimes
for a specific jobsite and participate in
training days for major customers,
demonstrating safe use of equipment and
running training seminars. This is in
addition to the routine safety briefings that
accompany equipment rental. We see this
as an area of added value and a way to
enhance safety with those we work with
and across our sector more widely. We
now offer dedicated full-time safety
trainers for our customers in 145 markets
across North America and have
31accredited training centres in the UK.
Our customer training covers a broad
range of topics including:
Operator training
− Mobile elevating work platforms,
boom lifts and scissor lifts
− Forklifts, warehouse and
telehandler rough terrain
− Earth moving equipment, loaders,
excavators, backhoes
− Traffic control management
Train the trainer
− Mobile elevating work platforms
− Forklifts
− Earth moving equipment
− Fall protection
Scaffolding
− User hazard awareness
− Competent person
− Suspended platforms hazard user
awareness
− Suspended platforms competent
person
− Customised courses available
− Working at height safely
01 Recordable accidents
2023 2022
TRIR RIDDOR TRIR RIDDOR
US Recordable accidents 253 73 190 74
Incident rate 0.97 0.15 0.90 0.17
Canada Recordable accidents 18 5 25 5
Incident rate 0.89 0.12 1.49 0.15
UK Recordable accidents n/a 23 n/a 18
Incident rate n/a 0.25 n/a 0.22
Ashtead Group plc Annual Report & Accounts 2023
63
STRATEGIC REPORT
Developing our people
The commitment and skills of our
workforce contribute directly to our
success. Whatever level an employee is
atin the business, we aim to train them
toimprove their skills and give them
opportunities for career development
through clearly defined, but flexible career
pathways. To keep the best talent in the
business, we need to match our people’s
career ambitions by providing a clear
route for progress and development.
Weoffer a wide range of technical, sales,
management and leadership training to
allemployees.
For our largest group of employees,
skilled trades, we have two main
approaches to develop talent: career
pathing and career progression. Career
pathing is about providing employees with
a clear promotion pathway within the
business. For example, for a driver or
technician to become a store manager,
wehave a career pathway with associated
training courses that provide the skills
needed for the next step on that particular
career pathway. With this option, a team
member can see the skills they need to
develop and demonstrate to progress in
their career towards a management role.
For those that want to progress within
their specific job area, we offer career
progression. Within our skilled trades
employee group, this provides a clear
progress path that will enhance an
employee’s skills, ability and experience
within their trade or job role. For
example, technicians can achieve four
skill levels, with each level requiring
progressively more in-depth and expert
skill and knowledge. To pass from one
level to the next, the team member has to
pass an evaluation that shows their skills
match the next step on the ladder.
For frontline leaders in our store network
and other leaders in central operations,
we offer a range of leadership or senior
leadership training. These courses ensure
our leaders are equipped with the skills to
deliver on our business strategy. These
include inclusive leadership, coaching,
performance and financial management,
training skills and customer experience.
Our career development and training
initiatives include:
− technician apprenticeship and training
programmes;
− paid apprenticeships for trade school
students approaching graduation;
− the Jumpstart Sales programme;
− the Jumpstart Manager In Training
programme;
− intern programmes both in stores and
at the support office;
− a leadership curriculum for all store
managers;
− an Executive Leadership Development
programme; and
− coaching skills training for store
managers to enable better coaching
andmentoring of staff.
The Group’s career development and
training programmes are managed
through an online Learning Management
System (‘Sunbelt University’) that delivers,
tracks and manages all our training.
Furthermore, we have mapped skills
against a qualification framework so team
members and leaders can identify
learning and development needs, whether
for annual compliance purposes or to
support career progression.
Employee engagement
Getting ongoing feedback on how our staff
are feeling and then making any changes
necessary, is crucial to maintaining a
happy and fulfilled workforce. We pride
ourselves on having a strong culture,
witha strong sense of purpose amongst
our team members who take their
responsibilities to assist customers and
communities seriously. There is also a
strong sense of pride in a job well done,
such as when we are helping people get
back to normal after a natural disaster,
such as a flood, fire or tornado event.
Weconduct regular employee surveys
inNorth America and the UK, which
havereceived excellent levels of response.
We have been delighted with the results so
far, which show a high degree of employee
engagement and satisfaction but highlight
areas where we can improve.
In North America, our Express Yourself
Survey received an 84% participation rate
with an 88% engagement score. In the UK,
participation in the latest survey was 86%
with an 80% engagement rating.
Responses to the surveys are
overwhelmingly positive. We analyse
theresults and identify areas for
improvement, developing action
plansdown to a local level.
Human
capital
Example Career Pathways: Driver to store manager
Driver Dispatcher Store manager
Understanding all aspects of the
business, including being part of
high-performance teams, safety, and
customer service.
To prepare for becoming a dispatcher,
employees complete a development
programme on basic leadership skills.
12-month period of education, experience
and exposure, with leadership and team
development training.
To prepare for becoming a store
manager, employees complete a
development programme on team
leadership.
The Sunbelt leaders programme
provides leadership skills and training to
help staff focus on operational and
financial performance goals.
Ashtead Group plc Annual Report & Accounts 2023
64
Responsible business report continued
Pay and benefits
Pay and benefits is one of the most
significant factors in attracting and
retaining the best people. Our employees’
pay and benefits are made up of
competitive fixed pay and a range of
benefits and incentive programmes to
motivate employees and support our
business’ success. Sunbelt UK is an
accredited Living Wage Employer while in
North America we have adopted a Leading
Wage approach to ensure all employees
are paid an hourly rate more than the state
and federal recommended rates and at a
level which is competitive to the market.
In addition, we provide a comprehensive
package of benefits ensuring they
represent affordable and smart choices
for employees. Each benefit offering has
been designed to work with another,
providing a financial safety net that serves
those employees in need, as well as
providing us all with a proper sense of
security. In the US we offer robust and
comprehensive medical coverage and
have limited increases in member
contribution rates despite the increasing
costs of healthcare. By continuing to
Workforce turnover
We aim to hire the best people, train them
well and look after them. This ensures our
employees provide the best customer
service. We invest in our employees and
aim to retain them in the Group so we can
build on the skills base we have in the
business. We recruit extensively from the
communities we serve. You will find detail
about our recruitment in the section on
Communities on page 72.
Our sector generally suffers from high
turnover rates, especially in some of our
skilled trades, such as drivers and
mechanics. Our voluntary staff turnover is
17% in the US (total staff turnover is 21%),
20% in Canada (total staff turnover is 29%)
and 20% in the UK (total staff turnover is
23%). Our analysis shows that around two-
thirds of turnover happens within the first
two years of an employee starting to work
for us. As a result, we continue to focus on
improving our recruitment process, which
means finding the right employees for the
right openings. We have also reviewed and
redesigned our employee onboarding to
ensure new recruits get the support and
guidance they need from the very
beginning of their career with us.
promote wellness, we intend to maintain
afair and balanced health plan that is
considered one of the best in our industry.
Our retirement plans are well received
with a 95% enrolment rate in our US 401(k)
plan, 91% enrolment rate in Canada and
91% of UK employees participating in the
pension plan.
Furthermore, we have an employee
assistance helpline which offers free
confidential support and advice to those
inneed. We also have other benefits to
promote good health amongst our
employees. In the UK we have a flexible
holiday arrangement enabling employees
to purchase additional holiday entitlement
or sell unused or unwanted holiday back
tothe Company, giving the employee more
flexibility and choice in how they use their
contractual benefits.
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65
STRATEGIC REPORT
Social
opportunities
Diversity
Our recruitment comes predominantly
from the areas immediately around
ourlocations, therefore providing
opportunities for local people and
providing a positive impact on local
communities. Providing equal
opportunities for all is a priority for
theGroup. We do not discriminate on
thebasis of a protected status, such as
sex, colour, race, religion, native origin
orage.In the US we are required by law
tomonitor ethnicity in our workforce
andwe maintain a diverse workforce
withc.30% of the US workforce
identifying themselves as being non-
white. We alsogather diversity data as
part of the recruitment process in the
UKand seek to monitor our diversity,
although the information held is less
complete than data in North America
where information has been gathered
over a longer period. We are committed
to providing opportunities for people
across our organisation regardless of
gender, ethnicity or other characteristic.
Our goal is to respect our collective
experiences and unique perspectives
from across the Group. Despite working
in a traditionally white male-dominated
sector, we are striving to make our
workforce more diverse and want our
people to reflect the communities which
we work in and recruit from. With this in
mind, we continue to strengthen our
approach to diversity, with the rollout of
adiversity, equity and inclusion playbook
for all team members in North America,
outlining our approach to diversity, what
it means and our plans in this area.
Training was also developed and rolled
out to all employees. Our employee
resource groups seek to advance an
inclusive culture that empowers
individuals and provides equitable
opportunity for team members and the
communities we serve. We have a similar
initiative in the UK called ‘Let’s Talk
Belonging’ which facilitates 20 equality,
diversity and inclusion ambassadors
across the UK who promote diversity
within the business.
Prudence Wangu, Team Lead,
Lighting, Grip and Lens
Prudence Wangu graduated in
Nairobiwith a degree in acting and
then left Kenya to travel to Canada.
After a difficult start, including living
ina shelter for six months, she
eventually found her way to William
F.White where she began to thrive.
“My trajectory is both encouraging
andmotivating – hard work and
perseverance are rewarded in this
organisation, no matter where you
arefrom. Despite being alone in a
country not my own, I have found my
family [at Sunbelt].” Prudence applies
that same family approach to helping
carve a path for the next generation
ofwomen leaders, recommending
encouragement, empathy and
compassion when it comes to
leadinga team.
EMPLOYEE
SPOTLIGHT
Ashtead Group plc Annual Report & Accounts 2023
66
Responsible business report continued
Workforce by gender
We are focused on the gender composition
of our workforce but understand our
workforce reflects the nature of our
business, the industry in which we operate
and the markets we serve, with just 12%
ofthe Group’s workforce being female.
Asignificant proportion of our workforce
are mechanics, technicians and drivers,
virtually all of whom have been male
historically. Therefore, while across
ourworkforce we seek to promote an
increasing presence of women in the
business, and we have seen success in
some areas of our business such as within
professional functions, sales and customer
service, we recognise that some roles will
continue to attract fewer women.
Nevertheless, while our industry has
traditionally had many more men than
women, we do have women at all levels
ofthe Group, from the Board to store
level. While four members of our Board
(44%) are female and we have women
onour senior management teams and
asstore managers and sales executives,
we realise we have work to do to
increasethe number of women
throughout the business.
We continue to prioritise recruiting the
best people for every role and are working
to make it easier for more women to join
and remain with the organisation. We
believe that in doing so, we will move
towards achieving a greater level of
female representation across the Group
atall levels starting from the grassroots
of our organisation.
Ashtead pays men and women the same
salary for the same role with the actual
remuneration being based on skills,
experience and performance.
However, as a result of our mix of
employees and the roles they undertake,
the average pay of men and women differs
across the business. Summarised in Table
03 is the amount by which average pay for
men exceeds that for women.
part of our long-term strategy to assist
team members through catastrophic
financial hardship. Any employee of
Sunbelt Rentals is eligible to receive
relieffrom this fund for the benefit of
themselves or their immediate family
members living in their household.
Employee wellbeing
It is crucial that our workforce is a healthy
one, both physically and mentally, and we
work hard to look after our people and
help them look after themselves. When
our staff are on top form, they provide the
best service to our customers. We are
also there to help when they find
themselves in difficulties.
In the UK our ‘Let’s Talk’ wellbeing
programme started with ‘Let’s Talk Mental
Health’ volunteers completing a two-day
professional Mental Health First Aider
course (MHFA England) and we plan to
train more staff in this important area.
InNorth America, mental health support
is available through our employee
engagement app and via the employee
assistance programme.
In North America, the Sunbelt Rentals
Employee Relief Fund was created to
support employees who are facing
financial hardships after a natural disaster
or other life-changing events. The Fund
was established initially to help the victims
of Hurricane Charley in 2004 and is now a
02 Workforce by gender
Number of employees Male Female Female %
Board directors 5 4 44%
Senior management 28 9 24%
All staff 22,226 3,129 12%
By region
US 16,906 2,081 11%
Canada 1,781 313 15%
UK 3,539 735 17%
03 Pay gap
Pay gap
US 4%
UK 1%
Canada 4%
Ashtead Group plc Annual Report & Accounts 2023
67
STRATEGIC REPORT
ENVIRONMENT
Protecting the environment is not just the
right thing to do; we believe rental has a
significant part to play. The environmental
benefits of renting equipment rather than
ownership are clear. The Group purchases
equipment from suppliers with strong
reputations for product quality and
reliability with whom the Group is working
to reduce the environmental impact of
equipment usage. Many customers using
one piece of modern application-specific,
world-class manufactured, well-
maintained and safe equipment as part of
a sharing economy is better for the planet.
It results in the manufacture of fewer
assets, use of fewer natural resources,
more efficient use of assets, and finally,
fewer assets reaching end of life and
therefore requiring disposal. Maintaining
our equipment to the highest standards
and investing in the newest and most
eco-efficient technology reduces
emissions further during its use and
extends equipment life. For example, the
increased use of telematics enables more
timely intervention where required,
thereby increasing efficiency and
reducingemissions.
We prioritised our environmental
commitment as part of Sunbelt 3.0 to drive
performance and enhance transparency
regarding our activities and achievements.
Our primary environmental goal is to
reduce our Scope 1 and 2 carbon intensity
per $m of revenue by 35% by 2030 and to
achieve an interim target of 15% by 2024.
In doing so, we are focusing our efforts on
company-owned vehicles, which account
for around 80% of our greenhouse gas
emissions from operations. While
remaining committed to reducing
emissions in our own operations, we are
also continuing to work as a partner in
innovation with our equipment suppliers
todevelop and bring to market more
efficient, lower carbon-emitting options.
We are also increasingly delivering
integrated and environmentally
responsible rental solutions for our
customers. Ultimately, these activities
willreduce the indirect (Scope 3)
environmental impact of our operations.
Climate change has the potential to
impactour business, both positively and
negatively. For example, while we benefit
from the diversified nature of our
operations, adverse weather events or
natural disasters could negatively affect
economies and disrupt our business
day-to-day. However, they could also
increase the demand for our services as
we respond to the needs of our
communities managing and recovering
from such events. Our climate change
focus is centred on our impact on the
environment and how we can reduce it
through both our direct and indirect
activities. We monitor our performance
ina number of ways, including
assessment of:
− fuel usage;
− electric and gas usage; and
− fleet telematics.
As a growing business with ambitious
expansion plans, our absolute greenhouse
gas (‘GHG’) emissions will necessarily
increase in the near-term as the size of
our rental fleet and geographical footprint
grows. While we believe that rental
provides a long-term net environmental
benefit from the shared use of modern,
well-maintained assets, we continue to
evaluate the most efficient and effective
approaches to limit the increase in our
GHG emissions as we continue to grow.
While our absolute carbon emissions will
increase in the near term, we are
committed to reducing our carbon
intensity. We also believe that our
absolute carbon emissions will decrease
in the longer term as technological
solutions develop and we position
ourselves to be atthe forefront of
bringing this technology to market.
Greenhouse gas emissions
The Group’s direct energy consumption
arises predominantly from the diesel and
petrol used in our vehicle fleet, the gas
consumption in our facilities and our
purchased electricity.
Our Scope 1 (fuel combustion and
operation of facilities) and Scope 2
(purchased electricity) GHG emissions are
reported in Table 04 on page 69, together
with details of the energy consumption
used to calculate those emissions.
In order to calculate the GHG emissions
and total energy consumption in mWh,
wehave used a ‘market-based method’
inaccordance with the GHG Protocol
Corporate Accounting and Reporting
Standard (revised edition), together with
emission factors from the UK
Government’s GHG Conversion Factors
forCompany Reporting 2022, the latest
available emission factors from the US
Environmental Protection Agency and the
Environment and Climate Change Canada.
In addition:
− in the US and Canada, due to the size
ofour operation and range of fuel and
electricity providers, we collect data
from the significant vendors and then
use this to estimate emissions
attributable to the balance. In addition,
we are required to estimate electricity
usage between the most recent meter
reading and the year end date. As such,
for the year ended 30 April 2023,
approximately 9% of the North
American emissions balance was
estimated; and
− in the UK, we collect data from all Scope
1 and 2 suppliers and hence, there is no
estimation involved.
Climate change
Ashtead Group plc Annual Report & Accounts 2023
68
Responsible business report continued
In the current year, our total Scope 2
emissions resulting from our US
operations have been impacted by the
sourcing of electricity in certain locations
from renewable sources which are REC
(renewable energy certificate) backed
(12% of our US consumption). We will
continue to explore the options available
tous to extend the sourcing of purchased
electricity from renewable sources where
market regulation allows. In the UK, we
source all electricity from renewable
sources which are REGO (renewal energy
guarantees of origin) backed except for a
small number of locations where energy is
sourced by a third party.
As commented above, while we are
focused on reducing our carbon
emissions, they are likely to increase as
we grow over the medium-term until
technological advancements and
increased manufacturing capacity reduce
reliance on the diesel engine or diesel
substitute fuels become more widely
available. Thus, at this stage, our key
performance metric is carbon intensity
aswe look to mitigate our environmental
impact. Our level of GHG emissions vary
with our activity levels which are in part
reflected in our revenue levels.
Accordingly, we have concluded that
themost appropriate intensity ratio for
Ashtead is revenue intensity.
Our intensity metric is therefore carbon
emissions per million dollars of
revenue(tCO
2
e/$m).
2023 2022
Carbon intensity ratio
– emissions per $m of
revenue (tCO
2
e/$m) 38.4 42.2
On a constant currency basis (using this
year’s exchange rates) our intensity ratio
has reduced 11% from 42.9 to 38.4.
Our first solar power installation went
live at our Warner Robins store in
Georgia. We installed 108 photovoltaic
solar panels, which will produce
almost 100% of the store’s electricity
needs. Energy simulations for the
installation estimate annual electricity
production of 63.5 mWh, delivering
savings of 45 tonnes of CO₂ emissions.
Where we can source alternative
energy and save on emissions in a
cost-effective manner, this is what
wewill do.
04 Greenhouse gas emissions
2023 2022
UK Total UK Total
Scope 1 tCO
2
e/year* 31,288 340,782 30,099 302,843
Scope 2 tCO
2
e/year* 776 30,380 357 26,977
Total tCO
2
e/year* 32,064 371,161 30,456 329,820
Energy consumption
used to calculate
emissions mWh 148,497 1,511,320 131,148 1,317,129
* tCO
2
e/year defined as tonnes of CO
2
equivalent per year
GENERATING
OUR OWN POWER
Ashtead Group plc Annual Report & Accounts 2023
69
STRATEGIC REPORT
Expanding our emissions
reporting
Historically we have not reported Scope 3
emissions due to the difficulty in gathering
accurate and reliable information.
Nevertheless, we are working to quantify
our Scope 3 emissions so we can monitor
them and report on them in the future and
have completed a review of the Group’s
Scope 3 carbon footprint to identify which
of the Scope 3 categories are relevant to
the Group and of those, which we believe
will be most material. As a result, we have
concluded that the majority of our Scope 3
emissions arise through our customers’
use of our equipment on their sites and
projects (category 13), emissions from the
use of sold rental equipment subsequent
to our ownership (category 11), all of which
are required to be accounted for in the
year of disposal, and the embedded
carbon in our supply chain (category 2).
Consequently, they are based on broad
assumptions across a huge number of
assets which are inherently difficult to
validate, including annual hours of use,
average fuel consumption, average engine
load factor and, for category 11, the total
lifetime hours of use of assets subsequent
to our ownership. Accordingly, our Scope 3
emissions will always be subject to a
significant application of judgement and
hence a high degree of estimation
uncertainty. We expect to complete this
work in 2023/24.
Waste
and water
Reducing waste going to landfill,
increasing recycling and reducing
wateruse are all part of Lead with ESG.
We are strengthening our processes in
these areas and establishing metrics
andtargets.
Waste
Our business model necessarily
promotesless waste overall going to
landfill because we are renting the same
piece of equipment to many customers
and maintaining it to such an extent that
ithas a long product life. If each of our
customers were buying all the equipment
they need, perhaps using it only a few
times and then disposing of it, there would
be considerably more equipment going to
waste than with a rental model. We are
working proactively with our supply chain
to increase the amount of recycling of our
equipment that can be done to avoid even
obsolete equipment going to landfill.
To assess more accurately the volume of
waste we generate and recycle, we are
working with our waste contractors
across each of our locations and are
pursuing programmes to reduce the
volume of waste we produce in all our
territories. We are working with suppliers
to reduce the packaging included with
products we procure and are partnering
with them to develop takeback
programmes for equipment packaging
and protective materials. We offer
recycling at our rental sites, partnering
with suppliers to enhance the recyclability
of products.
Reducing water use
Our approach to water stewardship is to
focus our efforts where water is scarce.
We have used the World Resources
Institute’s Aqueduct tool, which helps
organisations identify their water risks,
tomap where we are operating in areas
ofwater stress or high-water stress.
Across the Group, 23% of our stores are
in areas of water stress or high-water
stress, principally in California and the
southwest and central states of the US.
This provides a blueprint for where we
are targeting water-saving initiatives by
introducing technology to help reduce
water use in these areas.
Water saving initiatives available to us
include the use of closed loop wash
systems where we reuse water many
times over, as well as water recovery
systems where we capture water run-off
for use within wash-bays.
Environmental
opportunities
Unlike many other companies, we believe
an increased focus on the environment
will also bring significant competitive
advantage. There are two main factors
contributing to this opportunity.
Firstly, as regulations change requiring
greater use of lower carbon technologies,
companies will voluntarily choose to
usemore environmentally friendly
equipment. However, emerging
technology is more complicated,
requiring a different skill set to maintain,
and more expensive, at least initially, than
existing technology. Consequently, it will
be more efficient for companies to rent
equipment from us rather than buying it,
providing an additional impetus to the
shift from ownership to rental.
Secondly, the more extreme weather
events associated with climate change,
such as hurricanes, wildfires, and
extreme precipitation and flooding, lead to
the kind of damage that requires a rapid
response and clean-up operations in
which we are highly experienced. Our
disaster response capability is one of the
specialty areas in which we are known to
excel and increased frequency of extreme
weather events is likely to increase
demand for our products and services.
Fleet composition
Every year we invest millions of dollars in
new equipment and fleet which produces
less carbon, less particulate matter and
needs less maintenance and servicing. We
work closely with our suppliers to develop
the next generation of equipment.
Consideration of maintenance and
servicing requirements as well as what
happens at the end of a product’s useful
life are a key part of this process, as we
believe that true sustainability needs to
consider a holistic, whole life cycle
approach. We replace our rental assets
every seven to eight years and as we retire
older equipment, the new equipment we
buy delivers efficiency improvements. But
we do not simply rely on these incremental
improvements.
The chart above shows the composition
ofour fleet today. While it will take time
before a significantly greater proportion
ofour fleet moves away from diesel power,
approximately 20% of our rental fleet is
already powered by alternatives to
traditional diesel power, including battery,
electric and hybrid options. The large
majority of our diesel-powered fleet also
meets the most stringent North American
and European emissions standards and
05 Group fleet composition
1
2
3
1 Fossil fuel 67%
2 Electric 18%
3 Other, inc. non-powered 15%
Ashtead Group plc Annual Report & Accounts 2023
70
Responsible business report continued
we have one of the most modern fleets of
rental equipment in the industry. We have
focused on investing in next generation,
low- and zero-emission technology
including battery, electric, solar and
hybrid options, and are committed to
working closely with all our suppliers
tohelp them develop the most
environmentally sustainable equipment.
In addition, we have developed
partnerships with suppliers to introduce
alternative energy and fuel solutions for
our customers. For example, HVO
(hydrotreated vegetable oil) fuel can
replace diesel with no changes required
tothe engine or operational infrastructure
and is approved for road and non-road
use. It has been shown to create a
significant reduction in net carbon
emissions (CO₂e) over the entire life cycle.
Leading and partnering in
innovation
We are not content with simply being a
buyer of next generation equipment; we
want to influence and support our larger
suppliers to accelerate the shift to a
low-carbon economy. We have hundreds
of thousands of rental customers and are
also a major buyer of equipment from the
large manufacturers. We are well placed
to understand customer demand for
environmentally sustainable equipment,
are knowledgeable about the everyday
demands on equipment and continuously
support manufacturers in meeting these
requirements with their product
development. We work closely with
manufacturers to help them design,
develop, trial, and bring to market
innovative, environmentally sustainable
equipment, including electric versions
ofthe most widely used pieces of rental
equipment. At the same time, our desire to
invest in new and low-carbon technology
demonstrates to them there is demand for
these products. Finally, by bringing new
products to a wide audience of customers
in the rental market, we help develop
acceptance of new equipment and drive
further demand.
As part of our efforts in this area, we have
made targeted investments, working with
innovative start-up manufacturers in the
areas of portable battery power, and
battery design and packaging.
Electrifying our company
vehicles
Over 80% of our Scope 1 and 2 carbon
emissions come from our vehicle fleet.
Wedrive over 300 million miles each year
delivering and collecting our rental
equipment with a fleet of over 14,500
company vehicles. Tackling emissions
from our vehicle fleet is therefore a key
area of focus for us and we are doing
thisin two ways:
− using the vehicles that we have in the
most efficient way possible. We do this
through onboard telematics to monitor
driving efficiency and track fuel use,
while also focusing on route and load
optimisation, optimal maintenance
schedules for vehicles and deploying
fuel efficient tyres and tyre pressure
monitors; and
− shifting our vehicle fleet away from
traditional fossil fuels to alternative fuel
types. For example, we are working with
our manufacturers to test a range of
EVs for the business across our sales,
service and delivery fleet. This is an
area that will deliver significant carbon
savings but will take longer to establish
and require capital investment, both in
relation to the purchase of the vehicle
but also in developing the charging
infrastructure, which is reflected in
ourfinancial planning.
In North America, we have started
trialling Ford e-Transit vans and have also
ordered 10 fully electric Class 8 trucks.
The trucks from Peterbilt and Freightliner
will allow us to start assessing the
benefits and challenges of running fully
electric heavy trucks in terms of mileage,
efficiency, cost and maintenance. All our
Class 8 trucks will operate in stores in
California where distances between our
stores and customers are shorter and
more suited to EVs.
By far our biggest vehicle commitment is
an order of up to 700 Ford F-150 Lightning
electric light duty trucks. This will account
for a significant portion of our fleet of
around 2,500 Ford F-150s and we have
deployed c. 400 vehicles into our service
and rental fleet in 2022/23.
Ashtead Group plc Annual Report & Accounts 2023
71
STRATEGIC REPORT
OUR COMMUNITIES
With almost 1,400 stores, we are present
in a lot of local communities. We strive to
have a positive impact and do this through
job creation, charity support, volunteering
and responding to emergencies. We
continue to open new stores, bringing
opportunities through recruitment,
economic activity and a new avenue for
local support into these communities.
Ouremergency response team continues
to grow and we are able to support our
communities, often as a first responder,
intimes of crisis. We maintain long-term
charity partnerships, investing in key
initiatives and supporting through our
employee volunteering days. As we open
more stores in new locations, our
opportunity to deliver positive impact in
our local communities grows. Alongside
community support and investment, we
consider it our responsibility to recruit
locally as much as possible, providing
economic opportunity and skills
development for local people, including
afocus on veterans and people not in
education, employment or training.
Community
engagement
Working with local and national charities
is important to us, but the value we can
bring to communities is broader than just
supporting charitable causes. The social
value generated by our operations,
through providing recruitment and
training to the communities in which we
operate, our employees volunteering in
local communities and providing disaster
relief in times of crisis, are all ways that
we support and engage with the
communities we serve. A big part of our
community impact comes from recruiting
from the local community and training
those team members, especially young
people and veterans.
Enhancing employee
volunteering
We seek to support our communities and
transfer valuable skills through employee
volunteering in local projects. We have
always had a volunteering allowance for
staff, but we have enhanced our
volunteering policy, aligning and improving
different pre-existing policies across the
Group. To further our volunteering
activities, we are investigating ways
toenhance the employee uptake of
volunteering opportunities and how we can
co-ordinate volunteering activities to have
the greatest impact on our communities.
Emergency response in times
of need
In the event of natural disasters or other
emergency situations, we are often called
in as a first responder. We provide
equipment and power to restore services
and support clean-up operations, with the
aim of getting communities up and
running again as fast as possible.
In North America, we have an emergency
response team (‘ERT’) which activates
inresponse to weather-related disasters,
such as hurricanes and tornadoes,
fires,floods and snowstorms, or other
everyday emergency situations where
communities need rapid support. Every
emergency situation is different and
members of the ERT are experts in their
field and are able to respond with the
right quantity and type of resources for
the situation at hand. Involvement in the
ERT by our employees is voluntary and all
are ready to deploy at a moment’s notice
in the event of an emergency.
The team is exceptionally fast at
establishing operational teams on the
ground and dispatching equipment such
as generators, lighting, forklifts and
excavators, drying, heating and cooling
equipment, scaffolding and pumping
solutions. The ERT coordinates our
response from its command centre at our
support office in Fort Mill, South Carolina.
On the ground, team members often build
a strong bond with the communities they
are supporting, spendingweeks, or even
months, aiding inrecovery efforts.
Recruitment
With our Sunbelt 3.0 strategy, we are in
growth mode. We have targeted 298
greenfield store openings in North
America and added 165 locations in
2022/23, 77 of which were greenfield
locations. Recruiting the best new talent
is critical for supporting these growth
plans and this will benefit the
communities we serve.
Our focus is on accurate recruitment
which means finding the right people for
the right openings and accurately
communicating to candidates what the job
entails alongside the benefits of working
for Sunbelt. We are working to develop
further our role profiles so as to provide
candidates with better insight to the
nature of roles within Sunbelt and to the
nature of a career at Sunbelt during the
recruitment process.
We have also reviewed our onboarding
processes to enhance the employee
experience in the first 18 to 24 months of
working with Sunbelt. We experience the
highest levels of employee turnover during
this time frame, and beyond two years
employee turnover drops drastically.
UK apprenticeship programme
Through the UK’s apprenticeship
programme, we took on 49 trainees this
year and we plan to recruit more in the
coming year. Our apprentice programmes
take between one and three years to
complete and usually include outside
training and a formal NVQ qualification,
in addition to on-the-job training.
Wehavesix apprentice streams – plant
maintenance, customer service,
driver,electro technical, mechanical
engineering and civil engineering.
Responsible business report continued
ENGAGING YOUNG PEOPLE
WITH THE FILM INDUSTRY
Having real social impact is important
to us. We worked with Pinewood
Studios in the UK on their Futures
Festival to inspire and educate young
people about careers in the film and
television industry. Our film and
television business has a base within
Pinewood, so volunteer teams from
there led the way, providing specialist
equipment, as well as support being
given from other stores nearby.
We provided a range of equipment
including two Sony Venice camera
set-ups for the students to interact
with. Nearly 4,000 young people
attended the event and we were able
tohelp inspire and engage them about
potential careers in television and
production.
Ashtead Group plc Annual Report & Accounts 2023
72
EMPLOYEE
SPOTLIGHT
Military recruitment
We are committed to supporting veterans
and aspire to be an employer of choice for
military veterans. Around 9% of our
workforce in the US are military veterans
and this is a number we are aiming to
grow. Our goal is for veterans to be able to
find a fulfilling workplace at Sunbelt
where they can enrich our culture and
contribute to achieving our goals. The
skills gained during active service match
well with the skills we are looking for in
positions across our business, from our
skilled trades to leadership roles.
We have developed a robust programme
for recruiting and retaining veteran
employees, which is based on four
foundational pillars: resources;
recruitment; recognition; and retention.
We actively recruit members of the
armedforces through job fairs, strategic
partnerships, and programmes such
asthe U.S. Chamber of Commerce’s
Hiring Our Heroes programme and our
newest partner, the U.S. Department of
Defense, where we became an official
Skillbridge provider.
In recognition of our work with veterans in
the US, we were awarded a gold military
friendly employer award and a gold award
from the U.S. Department of Labor under
their HIRE vets programme.
Our commitment to employing military
service leavers and veterans is the same
in the UK as in the US and our businesses
work together on veteran recruitment
strategy, pooling our collective experience
and resources. We were awarded the gold
Armed Forces Covenant in recognition of
our support for the defence and armed
forces community, and for demonstrating
flexibility towards training and
mobilisation commitments for Reservists
and Cadet Force Adult Volunteers.
We are working with the UK Ministry of
Defence Careers Transition Partnership to
recruit those leaving the UK armed forces
into the Sunbelt family. We also work with
the employment teams of two veterans’
charities – Walking With The Wounded and
Project RECCE – who work to support
armed forces veterans in many ways,
including finding sustainable employment.
In addition, we launched our official
network of veteran ambassadors across
North America and the UK to support
existing veteran staff and help attract
more team members.
SKILLBRIDGE
The Skillbridge programme enables
US service members to gain civilian
work experience during their last 180
days of military service. Funded by
theU.S. Department of Defense, the
programme gives us a cost-effective
way to bring veterans into the
organisation. The partnership includes
valuable real-world job experiences
where we train, teach and mentor
service members on Sunbelt-specific
roles. The programme also helps
Service members make an easier
transition from military service into
anew career. We have two retired
military team members leading this
effort and giving us an advantage,
asthey can easily relate, and help
totranslate military experience into
Sunbelt roles.
Jamie Green, apprentice
Jamie Green joined as a Powered
Access apprentice after serving in
the British Army for seven years.
Heattended a careers open day
anddiscovered how Sunbelt Rentals
supports and opens up
opportunities for veterans, making
us anobvious choice of employer.
He said: “it is a good system of
around sixto seven weeks working
in the depot followed by two week
blocks studying at college in
Warwickshire, where Sunbelt
covers the cost of accommodation,
etc. Ienjoyed the combination of
practical experience and classroom
learning, whichmeant I was able to
get stuck intowork straight away.”
Ashtead Group plc Annual Report & Accounts 2023
73
STRATEGIC REPORT
Charities
Gary Sinise Foundation
We are in the eighth year of our
partnership with the Gary Sinise
Foundation, which works to honour
America’s defenders, military veterans,
first responders, their families and those
in need. The Foundation does this by
creating unique programmes designed
toentertain, educate, inspire, strengthen
and build communities. Through our
partnership, we aim to raise funds for
andawareness of the Foundation’s work.
Specifically, we support the Foundation’s
R.I.S.E. (Restoring Independence,
Supporting Empowerment) programme,
which builds 100% mortgage-free,
specially adapted smart homes for
severely wounded heroes and their
families. We also support the Foundation’s
First Responders Outreach programme,
which provides critical funding for
America’s firefighters, police departments
and emergency medical teams, and
Snowball Express, a programme serving
the children and surviving spouses of
fallen military heroes. Our partnership
includes the Foundation’s Avalon Network,
a cognitive health and mental wellness
network that provides transformative
careto veterans and first responders
experiencing post-traumatic stress,
traumatic brain injuries and substance
abuse issues.
We supply the necessary equipment for
each of the R.I.S.E. programme’s projects
to the contractors working on the home
builds, at no charge. We also donate a
portion of rental proceeds from co-branded
Gary Sinise Foundation equipment and
organise various localised fundraising
efforts. Our goal is to bring heightened
awareness to the Foundation’s work
through continued fundraising and
outreach initiatives in an effort to help
positively impact the lives of veterans,
defenders and first responders. This year
we contributed $1m to the Foundation
through monetary and in-kind donations.
Inaddition, we donated a customised 2021
Bronco First Edition which raised $350,000
through auction for the Foundation.
Charity partners
We continue to work closely with our other
designated charitable partners. In the US,
we work with the American Red Cross and
its affiliates such as the Second Harvest
Food Bank for which we have a food drive
every November in the US. In addition to
financial donations made to the American
Red Cross, we also often send equipment
and support to disaster-affected areas
within the US.
In the UK, we work regularly with a
number of charities, including CRASH, the
construction industry’s charity that helps
homelessness and hospice organisations
with their construction projects. This is
our 13th year as patrons of this charity.
We are also very proud of our ongoing
work in the UK with Weapons Down,
Gloves Up, a charity which works to
provide work opportunities for young
people not in education, employment
ortraining (NEETs), often taking them off
the streets and opening up opportunities
through the power of sport.
Veteran Spotlight – Ben Jenkins,
Regional SHEQ Manager
Ben Jenkins joined Sunbelt after
23years serving in the Royal Marines.
He is a regional SHEQ (‘Safety, Health,
Environment and Quality’) Manager
looking after the Midlands and East of
England, responsible forsupporting
safety, health, environment and quality
for all our employees, contractors and
customers. Ben believes his military
experience has given him directly
transferable skills when it comes
toorganisation, structure and
confidence in working independently,
aswell as communicating clearly and
keeping regularly in touch with the
wider team. “Ireally enjoy the variety of
the role; the combination of structure
and fluidity means I have to be adaptable
which keeps me on my toes. I have found
it particularly rewarding that I’ve been
able to have a positive impact in
different areas and that depot managers
now know me and feel comfortable
ringing me direct to advise and support
them on any issues they may face.”
Responsible business report continued
EMPLOYEE
SPOTLIGHT
Ashtead Group plc Annual Report & Accounts 2023
74
GOVERNANCE
Business ethics
Our commitment to the highest ethical
standards means that the Group Risk
Committee works to ensure these are
communicated and upheld throughout the
business. We believe in the rights of
individuals and take our responsibilities to
all our employees seriously and those who
may be affected by our activities. During the
year we updated the Group’s modern
slavery and human trafficking policy,
business ethics and conduct policy and
ethical sourcing policy, all of which are
available on the Group’s website. These
policies form part of our way of doing
business and are embedded in our
operations. They are also communicated
directly to employees through dedicated
communication and training programmes.
While we do not manage human rights
matters separately, we continue to assess
potential risks and do not believe they raise
particular issues for the business.
Senior employees across the Group receive
regular business ethics training to ensure
they are aware of their obligations and
responsibilities with regard to competing
fairly, the UK Bribery Act and, in the US, the
Foreign Corrupt Practices Act. This takes
place every two years in North America
with 2022/23 being a year of training, while
in the UK, it is undertaken annually.
Completion of training is monitored and
reported to the Group’s Risk Committee.
Anti-corruption and bribery policies are
maintained and reviewed on a regular basis
with relevant guidance incorporated into
our employee handbooks and available on
our intranet pages. Human rights and
modern slavery are important aspects of
our business ethics and you can read more
about these in our main Governance
section on page 84.
Human rights
At Ashtead we believe in the rights of
individuals and take our responsibilities
seriously to all our employees and those
who may be affected by our activities. We
have group-wide policies in place, all of
which protect our employees as they go
about their work which relate to our
business and our suppliers. These policies
form part of our way of doing business and
are embedded in our operations. We do not
manage human rights matters separately
as they form part of our approach to overall
business ethics.
Specifically, our ethical sourcing policy
addresses matters such as child and forced
labour, freedom of association, working
conditions, pay and hours, discrimination
and harsh or inhumane treatment.
Modern slavery
Modern slavery is an abuse of human
rights and we have a separate modern
slavery policy that commits the Group to
ensuring there is no modern slavery in our
business or our supply chain. The policy
applies to all Ashtead employees and our
subcontractors, and we expect similar
commitments from our suppliers. Any
suspicion that our policy is being breached
or at risk of being breached can be
reported through our anonymous whistle-
blowing lines in North America and the UK.
In relation to our supply chain, while the
Group sources goods and services from
awide range of suppliers, the Group
predominately works with a number of
major equipment suppliers, of which the
majority are based in North America and
Europe. The Group’s main suppliers relate
to its rental equipment who have strong
reputations for product quality and
reliability. Outside of the Group’s
expenditure on equipment, its key
expenditure relates to its workforce
andgoods and services procured locally
toits stores.
In the UK, we have entered into a
partnership with the Slave-Free Alliance to
help us keep up-to-date with the constantly
evolving risks associated with modern
slavery and to help the Group strengthen
further actions taken in relation to modern
slavery risks.
Whistle-blowing
Our confidential, third-party operated
whistle-blowing service is available to all
employees and third parties to raise any
concerns that they may have about
unethical or illegal behaviour, or potential
breaches of our ethical policies.
All whistle-blowing matters are
investigated and outcomes are reported to
the Board together with any action taken.
Our approach is one of non-retaliation and
we confirm that no employee will suffer
any detriment from raising genuine
concerns about ethical conduct.
Cyber security
As the world continues to move online,
accelerated due to the pandemic and
increasingly connected technologies, at
least in the short to medium term,
awareness, monitoring and adaptability to
cyber security issues is ever more crucial
for us. We are prioritising the monitoring of
any potential cyber security vulnerabilities
and working to ensure business continuity
under all potential scenarios. This year we
held our fifth annual cyber security month.
While securing hardware is an important
facet of information security, protecting the
data on our assets is critical to our success.
We have encrypted email for all team
members and our Information Security
SharePoint site is also available for all team
members. For more on cyber security risk,
see page 43.
Corporate
behaviour
BEING A RESPONSIBLE
BUSINESS
Our strategic plan, Sunbelt 3.0, has
enabled us to embed responsibility
within our strategy, with ‘Lead with
ESG’ being one of the five actionable
components of that strategic plan.
As we have discussed earlier, we
believe that rental is essential to
environmental progress as it enables
amore efficient use of assets across
organisations. Within this report,
wehave set out some of our specific
actions across each area of ESG.
Theseexamples are only a few of many
ongoing activities across the Group and
we will continue to challenge ourselves
through investing in new ways of doing
things, innovative use of technology
and through working with our
suppliers, customers and employees
todevelop new solutions.
These initiatives provide us with the
confidence to lead with ESG through:
− ensuring a commitment to health
and safety;
− enhancing our employee
engagement and diversity, equity
andinclusion;
− ensuring pay and benefits reflect
our market-leading position;
− reducing our carbon intensity
by35% by 2030; and
− ensuring continued strong
governance and stakeholder
engagement.
This is the right thing to do for our
stakeholders and will ensure the
long-term sustainable success of
theGroup.
Ashtead Group plc Annual Report & Accounts 2023
75
STRATEGIC REPORT
The Task Force on Climate-related
Financial Disclosures (‘TCFD’) provides a
disclosure framework for companies to
explain how they are responding to the
risks and opportunities arising from
climate change. UK Listing Rules require
premium listed companies to make
disclosures consistent with the
recommendations of the Task Force on
Climate-related Financial Disclosures
and, where they have not complied,
provide an explanation including details of
the steps being taken to ensure future
compliance. Responding to the risks and
opportunities arising from climate change
is an integral part of our business and is
embedded throughout the Group and
discussed throughout this Annual Report.
The statement below explains how
the Group has complied with the
requirements of LR 9.8.6R by including
climate-related financial disclosures
consistent with the TCFD
recommendations and recommended
disclosures, including the guidance
provided in the TCFD Annex. It addresses
all the disclosure requirements of the
TCFD and links to additional information
located elsewhere within the Annual
Report, except in the following areas:
− strategy: we have not sought to provide
quantitative scenario analysis but
instead provided narrative discussion of
risks and opportunities, and how these
may be relevant to different scenarios.
As such, the Group has not complied
fully with recommended disclosure (b)
or (c) of the strategy section. We believe
the Group has a resilient business
model which supports its long-term
sustainable performance. We have
considered a range of climate-related
scenarios which may impact the Group
in the future and believe these are
integral to the operation of the business
and the financial impacts, while not
separately identifiable, are reflected
inour regular budgeting and business
planning; and
− metrics and targets: the Group
hasnotcomplied fully with the
recommended disclosures relating
tometrics and targets.
The Group has not disclosed Scope 3
emissions as required by recommended
disclosure (b). Scope 3 emissions are a
material component of the Group’s
carbon footprint, with the most
significant components arising from
category 11 (use of sold products) and
category 13 (downstream leased
assets). As commented on page 70, the
Group is working on the quantification of
our Scope 3 emissions and expects to
complete this work in 2023/24. However,
the measure of Scope 3 emissions
involves a significant application of
judgement and hence will be subject to
a high degree of estimation uncertainty.
Furthermore, while we believe that
other metrics are less material for the
Group, we continue to work to establish
other relevant metrics and targets to
measure climate-related risks and
opportunities.
These disclosures also address the
requirements set out under the Companies
(Strategic Report) (Climate-related
Financial Disclosure) Regulations 2022.
Governance
The Group’s Board of directors is
responsible for setting the Group’s
strategy, taking into account all relevant
risks and opportunities, including those
related to climate matters. The Group’s
rigorous risk management framework is
designed to identify and assess the
likelihood and consequences of risks and
to manage the actions necessary to
mitigate their impact, including those
related to climate-related matters, and is
detailed on pages 40 and 41.
The Group launched its latest strategic
growth plan, Sunbelt 3.0, in April 2021
which included ‘Lead with ESG’ as a core
actionable component, which incorporates
climate-related considerations, including
our commitment to reduce our Scope 1
and 2 carbon intensity. Further details as
to how climate-related considerations are
incorporated into the strategy are on page
34 and in our Responsible business report
on page 68. The Board receives updates
at each board meeting as to the Group’s
progress against our strategic goals, with
a formal strategic review undertaken on
an annual basis. In addition, ESG metrics
have been embedded in the Group’s
remuneration arrangements through
the Strategic Plan Award, launched in
conjunction with Sunbelt 3.0, and overseen
by the Remuneration Committee, as
detailed on page 103.
The Board of directors is assisted in
monitoring the success of our ESG
initiatives through the work of the Group
Risk Committee, which monitors the
progress we make against our strategic
ESG objectives and the targets we have
set. The Group Risk Committee is chaired
by our chief financial officer and reports
formally to the Audit Committee on an
annual basis.
One of the principal risks and
opportunities faced by the business
relates to environmental matters,
including those contributing to climate
change. On a day-to-day basis, the Group’s
response to climate-related risks and
opportunities is led by Brendan Horgan,
the Group’s chief executive, who has over
25 years’ experience in the rental industry
through which he has developed an
in-depth knowledge and understanding
ofcurrent and emerging technologies as
they apply to our business, including their
environmental impact. Activities include
overseeing the Group’s work with
suppliers and customers on developing
and bringing more environmentally
friendly equipment options to market as
discussed in more detail on page 44,
directing the business in relation to
reducing emissions through direct
operations and approving associated
capital expenditure plans.
Our actions across each of these areas
areembedded within our operational
activities across the business, supported
by the Group’s managing director of ESG
and dedicated specialists in North
America and the UK. An ESG operating
committee, chaired by the Group’s
managing director of ESG and including
representation from across the
businesses, has been established to
monitor progress of our ESG-related
initiatives and performance against
thetargets we have set for ourselves.
Theresults of the ESG operating
committee’s work are reported to
theGroup Risk Committee.
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
Ashtead Group plc Annual Report & Accounts 2023
76
These primary roles and responsibilities for the assessment and management of climate-related risks can be summarised as follows:
Frequency of review Roles and responsibilities Areas of focus in 2022/23
The Board
Regularly, as required − Oversight of risks and opportunities and
how these are reflected in the Group’s
strategy
− Assessment of the Group’s risks related to
climate and actions taken to mitigate
− Approval of the Group’s budget, including
fleet and other capital expenditure plans
necessary to progress ESG priorities
− Review of the Group’s key performance
indicators and progress against the
ESG targets established by the Group
− Review and approval of TCFD and other
sustainability-related disclosures
− Approval of the Group’s budget
− Review of Group strategy and progress
against actionable components of
Sunbelt 3.0
Remuneration
Committee
As required
− Assessment of remuneration policies and
targets to ensure that they appropriately
incorporate ESG elements
− Review of performance against existing
ESG-related targets
Nomination
Committee
As required
− Ensuring the board composition reflects the
skills and experience required, including
those related to climate-related matters
− Continued consideration of board
composition
Audit Committee
Formal annual review of
Group risk register with
periodic detailed reviews
of specific risks
− Oversight of the Group’s corporate financial
reporting, including its ESG-related
disclosures
− Oversees risk management processing,
including oversight of the work of the Group
Risk Committee
− Oversight of the Group’s assurance
framework, including in relation to ESG
metrics and reporting
− Review of TCFD and other
sustainability-related disclosures
− Consideration of the impact of
climate-related matters in the Group’s
financial reporting
Risk Committee
Bi-annual review, and
formally reports to the
Audit Committee on an
annual basis
− Responsible for oversight of the Group’s
approach to risk management, including
review of the identification and management
of significant risks, including those related
to climate matters
− Consideration of the impact of
climate-related matters on the Group’s
risk landscape
ESG operating
committee
Bi-monthly
− Oversight of annual areas of focus in
executing the Group’s ESG priorities as
summarised below
− Management of data gathering and
reporting processes for ESG data
− Progress against each of the Group’s
key ESG priority areas
− Monitoring of performance against ESG
targets
− Assessment of future priorities
Management teams involved day-to-day in managing climate-related matters include:
− fleet management: engagement with our key fleet suppliers in the development and bringing to market of new technologies. In addition to
our work with key equipment suppliers, examples include our partnerships with Viridi Parente and Moxion;
− customer engagement: working with customers to deliver low- or zero-carbon solutions;
− vehicle procurement: developing vehicle procurement plans which reflect transition to low- or zero-carbon solutions, including the use of
alternative fuels and battery or other power sources. This includes the introduction of the Ford F-150 Lightning pickup trucks into our
service fleet in 2022/23;
− environmental specialists: supporting broader management teams in the development of strategies to deliver the Group’s ESG priorities,
and considering transition plans to support a low-carbon economy;
− property and utilities: assessment of property standards and implementation of energy improvement programmes (e.g. LED retrofit
programme) and management of energy procurement; and
− finance: supporting the measurement and reporting of climate-related matters, including assessment of risks and opportunities and
consideration of the impact on accounting matters.
In progressing the Group’s efforts further in this area, the Group has recently appointed an SVP of sustainability to bring greater focus
and co-ordination to the Group’s range of sustainability initiatives and lead our efforts in developing a clear strategy to support the
Group’s transition to a low-carbon economy. This role will also enhance the Group’s existing reporting frameworks.
Ashtead Group plc Annual Report & Accounts 2023
77
STRATEGIC REPORT
Task Force on Climate-related Financial Disclosures continued
Strategy
Climate-related risks and
opportunities
The Group’s rigorous risk management
framework is designed to identify and
assess the likelihood and consequences of
risks and to manage the actions necessary
to mitigate their impact, including those
related to climate-related matters, and is
detailed on pages 40 and 41. We do not
consider the risk arising from climate-
change to represent a separate principal
risk for the Group as it is intrinsically linked
to the Group’s other principal risks and the
day-to-day management of the Group.
As part of the Group’s risk management
process, the Group has undertaken a
material issues assessment through a
series of workshops, which considered
both internal and external reference
points to identify the significant risks
andopportunities for the Group from an
ESG perspective, the results of which are
detailed on pages 60 to 61 within our
Responsible business report and which
are considered as part of the Group’s
broader risk assessment. They are
analysed into four key areas: our people;
the environment; our communities; and
governance. Climate-related matters
fallwithin ‘the environment’ area but
importantly the Group believes climate-
related matters represent significant
opportunities as well as posing certain
risks for the Group. The Group believes
that its market position and financial
strength brings it significant competitive
advantage in responding to these risks
and maximising the opportunities.
Specifically, the Group has identified
opportunities arising from the
development of new products, solutions
and services which support the transition
to a lower-carbon economy, the shift in
customer preference from ownership
torental and the overall benefits to the
environment as a whole which arise
fromsharing assets over their life cycle,
described in more detail on page 34,
Leadwith ESG and on pages 70 and 71
within the Responsible business report.
The Group considers the range of
climate-related risks and opportunities
over the short, medium and long-term. In
assessing these time horizons, the Group
has defined the following time horizons:
− short-term – over the next three years.
This timeframe coincides with our
annual budgeting and planning time
horizon. We would expect to see
ongoing technological development
andlegislative changes associated with
emissions may develop;
− medium-term – three to five years.
Ongoing market and technology
developments, and increasing customer
focus on environmentally friendly
solutions; and
− long-term – beyond five years. While we
believe there is far greater uncertainty,
but in addition to those risks and
opportunities arising in the short to
medium-term, there is greater scope for
technological advancement in battery
technology, alternative power sources,
alternative fuels and commercial
production enabling a more rapid move
towards a lower carbon environment.
Each risk and opportunity considered,
regardless of the applicable time horizon,
is factored into the Group’s strategic
planning on an ongoing basis. As
commented above, given the nature in
which these risks and opportunities are
intrinsically linked to the Group’s day-to-
day operations, they form part of our
financial planning and budgeting
processes, instead of being assessed as
astandalone matter. For example, the
costs associated with the purchase of
battery powered rental fleet, or the
property upgrades as part of the LED
retrofit programme, form part of the
Group’s capital expenditure plans.
Overall, we believe that the climate-
related risks relevant to the Group are
those associated primarily with transition
risks rather than physical (acute and
chronic) risks, brought about by extreme
weather events or changing weather
patterns. Physical risks are mitigated
bythe diverse nature of the Group’s
operations. The Group operates from
over1,350 stores across the US (where
weare present in all but one state),
Canada (where we are present in eight
provinces) and the UK. Our largest store
has c. $130m of rental fleet at cost (c. 1%
of the Group’s fleet) while c. 98% of our
locations have less than $50m of rental
fleet at cost, the majority of which is out
onrent at any particular time. As a result,
no one store is material to the Group
suchthat a natural disaster would have
asignificant impact on the Group’s ability
to operate.
While we believe the impact of physical
risks on the Group are mitigated by its
diverse operations, they could have a more
significant impact on the Group’s supply
chain. If a supplier was disrupted due to an
acute weather event, it may affect our
ability to acquire new fleet. However, we
have inherent flexibility within the Group’s
business model with a rental fleet of c.
$16bn (original equipment cost) and could
continue to operate, although it may affect
our ability to grow as planned. In this
scenario, we would delay equipment
disposals in the short-term.
Policy and legal risk (short, medium
and long-term)
Legal compliance covers matters such
aswastewater, storm water, solid and
hazardous wastes and materials, and
airquality. Breaches potentially create
litigation matters for the Group which
mayresult in fines and penalties for
non-compliance. The Group’s Health,
Safety and Environmental departments
and our operational audit teams
continually assess the Group’s regulatory
environmental compliance. These audits
have a built-in corrective action process
toensure any identified non-compliance
isaddressed in a timely manner.
The Group monitors current and emerging
regulation to ensure our policies and
practices remain appropriate. Specific
examples of current regulation which
impacts the Group relate to ensuring our
rental and vehicle fleet is compliant with
engine emission standards such as the
Californian Air Emissions Standards or
theLondon Ultra-low Emission Zone
requirements. We believe that regulation
will increase over time and the potential
for increased pricing of GHG emissions
could lead to higher operating costs for
the Group in the future. However, these
costs are associated with the use of an
asset, whether it is owned or rented, and
so we expect these costs to be borne by
the user of the asset and hence, in the
case of rental, be reflected in rental rates.
Technology risk (medium to
long-term)
A significant proportion of our fleet
contains a diesel engine. While we will
seek to replace these assets with assets
using alternative fuel sources as they
become available, this will take time.
Indeed, there are a lack of alternative
assets available today and limited
manufacturing capacity and so we expect
any transition to happen gradually. We will
seek to manage this transition in the same
manner as we managed the transition
from Tier 0 to Tier 4/5 diesel engines from
1994 to 2018. On average, we own assets
for seven to eight years and therefore
expect the full transition of our fleet will
only occur over the longer term.
We are working closely with suppliers and
customers to develop new technology,
including investment in partners to
assist in the development of battery
and other technology. We also believe
the development of HVO or other
environmentally friendly alternative fuels
will provide an alternative to the reliance
on diesel today.
We believe this shift to low- or zero-
emission technologies will increase the
cost of assets. As an example, for rental
equipment, we have experienced costs
Ashtead Group plc Annual Report & Accounts 2023
78
which are three times greater for a battery
version of diesel machine in early phase of
production. However, over time, we expect
the cost of greener technology to reduce
as production volumes increase and reach
commercial levels.
This will increase the cost of replacing
ourrental fleet. If we were to assume the
cost of a lower carbon asset to be c. 25%
greater than its diesel equivalent, then
itwould cost an additional c. $350m
perannum to replace our fleet, if an
alternative were available. Our current
rental fleet has an original equipment cost
of c. $16bn with a seven to eight year
replacement cycle. Thus, on average, we
replace $2bn per year (using eight years)
of which c. 70% ($1.4bn) is reliant on fossil
fuels. Assuming this costs 25% more to
replace with a non-fossil fuel alternative,
the incremental cost would be $350m. It
should be noted that this is an illustrative
figure only and will be embedded within
our capital expenditure plans going
forward and will not be a discrete one-off
item of capital expenditure.
Furthermore, we would expect rental
rates to increase to reflect the changing
asset cost base, and therefore to have a
limited net financial impact on the Group.
Based on the incremental capital
expenditure figure we have identified
above of $350m, we would estimate
incremental annual rental revenue of
$210m (based on an assumption of 60%
dollar utilisation), or $1.7bn over an asset’s
life (assuming an eight-year life).
Market risk (medium to long-term)
Emerging market developments are
monitored, using both third-party risk
analysis, as well as internal views of
emerging trends. Specifically, these
market factors include changing customer
requirements as a result of the
environmental standards to which they
operate to support their own low-carbon
objectives. Increasingly, we are providing
lower carbon solutions using existing
technologies as customers seek to
reducetheir carbon footprint. As an
example, we are able to reduce emissions
by using battery storage technology
combined with diesel generators so
thatthe generator operates at optimum
efficiency for a shorter period of time
andhence, uses less fuel.
As discussed below, we believe the shift
tolow or zero-carbon technologies will
aidthe shift from ownership to rental
ascustomers opt to rent newer, more
expensive technology rather than own it.
Reputation risk (short, medium and
long-term)
Breaches of environmental regulation
potentially create hazards to our
employees, damage to our reputation and
expose the Group to, among other things,
the cost of investigation and remediating
contamination and also fines and penalties
for non-compliance.
Failure to meet the Group’s climate-
related commitments, or breach of
environmental regulation, could result
inloss of revenue or financial penalty. In
relation to the Group’s existing Scope 1
and 2 carbon intensity reduction targets
which form part of the Group’s Sunbelt 3.0
actionable components, we are
performing ahead of plan and the
associated costs are reflected within our
financial performance and plans.
Management of the impact of these
climate-related transition risks and
opportunities forms part of the day-to-day
operational activities of the Group and our
financial planning reflects the financial
impacts and investments anticipated with
examples of their activities provided in the
Responsible business report on pages 70
and 71.
Opportunities
While we believe physical risks brought
about by extreme weather events or
changing weather patterns are mitigated
by the diverse nature of the Group’s
operations, our products are in high
demand to respond to the consequences
of events such as hurricanes, wildfires
and flooding. Increased frequency of
extreme weather events brought about
byclimate change will result in increased
demand for our products and services.
The rental sector supports many of the
principles of a circular economy. These
include shared use, efficient and reduced
use of resources, high levels of
maintenance and repair, and ensuring
further use or recycling of equipment at
the end of its useful life. At the end of its
service life with us, our equipment has
many years of use remaining and, as such,
we sell it in the secondary market. This
results in:
− lower emissions generated in the
manufacturing phase and fewer natural
resources being utilised;
− more efficient use of assets as the
optimal asset can be used for a
customer’s job with assets maintained
to a higher standard; and
− consequently, fewer assets reaching
end of life and requiring disposal.
The increasing level and pace of
regulatory requirements make it more
complicated and expensive for customers
to maintain compliance. Emerging
technology is more complicated, requires
a different skill-set to maintain, and is
more expensive, at least initially, than
existing technology. As such, it will be
more efficient for customers to rent
ratherthan buy a new asset, providing
anadditional impetus to the shift from
ownership to rental. Furthermore,
customers recognise the environmental
benefits of renting rather than owning
assets. This will contribute to a larger
rental market, from which we are well
positioned to benefit.
Our strategy is to ensure we have a
sustainable business over the long-term.
This is an integral part of Sunbelt 3.0,
particularly within the actionable
components, ‘Lead with ESG’ and
‘Advance Technology’.
Ashtead Group plc Annual Report & Accounts 2023
79
STRATEGIC REPORT
Task Force on Climate-related Financial Disclosures continued
Through our ‘Lead with ESG’ component,
we are looking to drive environmental
efficiencies in our transportation fleet and
the facilities we operate. The costs of this
transition are included in our financial
plans. This will beassisted by our ‘Advance
Technology’ component, which will deliver
a leading technology platform, capturing
the benefits of scale and enhancing
customer service. Operational efficiency
will deliver amongst other things:
− transport route optimisation, reducing
miles travelled to deliver the same
amount of fleet, resulting in lower
costsand carbon emissions; and
− increased asset utilisation, through
use of enhanced telematics to
maximise asset uptime, reducing the
number of assets required for a certain
activity level.
Furthermore, recent legislative Acts in
theUS, such as the Inflation Reduction
Act,are providing incentives for the
development of a broad basket of energy
production and manufacturing, ranging
from solar field construction to battery
manufacture. We believe that rental will
play a significant role in supporting the
initial construction and future
maintenanceof these facilities.
In considering the impact of the risks and
opportunities considered above on the
Group’s financial statements for 2022/23,
we do not believe that there are any specific
adjustments required. Specifically, the
Group has considered if there is any
potential impact on rental asset lives and
residual values. The Group assesses asset
lives and residual values on an annual
basis to determine that the Group’s
estimates remain appropriate. Indoing
so,the Group has considered theimpact
oftransition to alternative technologies on
its existing rental fleet, orthe introduction
of legislation in relation to emissions.
However, as we note above under the
‘technology’ risk, we believe thatany
transition in technologies will be gradual
and therefore asset lives and residual
values remain appropriate.
We have made a commitment to reduce
ourcarbon intensity by 15% by 2024 and
35% by 2030, compared to the base line
level in 2017/18. Details as to how we plan
to achieve these commitments are set out
under ‘metrics and targets’ on page 81.
In addition, the Group is working to
establish a detailed long-term transition
plan, considering guidance including that
issued by the UK government transition
planning taskforce and the expectations
asto how Group emissions will evolve over
the long-term. We will therefore publish
atransition plan in due course once the
Group has completed its analysis.
Resilience of the Group’s strategy
The Group has a business model that is
both resilient and adaptable to change.
Furthermore, it benefits from a distributed
operating structure such that it is not
reliant on any particular location. The
Group’s strategy seeks to take advantage
of these benefits of the business model,
while recognising the risks inherent in the
business and the environment in which we
operate, whether that be economic
factors, competitor actions, cyber threats
or environmental considerations such as
climate change. We discuss our thinking
on climate-related matters on a regular
basis assessing how changes may affect
the business and how the business would
respond. While we consider a wide range
of scenarios we have outlined our thinking
under two climate scenarios, an increase
in average temperatures by 2˚C or less
and then if the average increase were 4˚C.
In a 2°C or less scenario, we believe that
the risks and opportunities faced by the
Group will be related principally to
transition risks (e.g. the application of
policy or regulatory initiatives including
increased pricing of GHG emissions,
changes in technology and changes in
customer preferences). In this scenario,
as we, our suppliers and our customers
look to reduce GHG emissions, we are
likely to face increasing costs whether
thatbe through increased cost of our
rental fleet or the cost associated with
thepricing of GHG emissions. While we
believe these factors will crystallise over
the medium to longer term as new
technologies develop, we are working with
our suppliers and other parties to advance
these technologies. In the near- to
medium-term, the availability of new
technology will be constrained by
production capacity and we would expect
to transition our rental fleet to the latest
technology gradually as we replace c. 15%
of our rental fleet every year. We believe
that increased costs and complexity will
provide additional impetus to the shift
from ownership to rental, increasing our
addressable market. We expect rental
andtransportation rates to reflect the
increased cost of rental and
transportation equipment, enabling us to
maintain similar levels of dollar utilisation
and therefore returns. We expect to
continue to dispose of old rental fleet in
the used equipment market, replacing
other organisations’ older, less
environmentally friendly equipment.
In a 4°C scenario, in addition to the
transition risks discussed above we would
expect to see an increase in physical risks
(e.g. increased instances of extreme
weather events, rising mean temperatures
and rising sea levels). As discussed above,
the diversified nature of the Group’s
operations means that no location is
material to the Group, mitigating the
immediate impact of physical risks on our
operations and enabling us to plan for the
longer term. In a 4°C scenario, there is an
increased likelihood of more extreme
weather events such as flooding, wildfires,
hurricanes and other natural disasters,
which cause damage and require clean-up
and support which we are able to provide
through our highly experienced
Emergency Response Team.
In any scenario, the speed of the transition
of assets will be constrained by the
availability of new technologies and
manufacturing capacity. Given our
partnership with key suppliers and our
regular replacement cycle, we expect to
be able to transition our fleet more quickly
than many other organisations. These
discussions and considerations are
factored into our routine financial planning
activities – for example, through our
capital allocation decisions.
The target for the Group is to
reduce our carbon intensity
35% by 2030”
Ashtead Group plc Annual Report & Accounts 2023
80
Risk management
The process for identifying, assessing
andmanaging climate-related risks is
thesame as for all the risks faced by the
Groupand is described on pages 40 to 45,
including our description of the Group’s
overall risk management framework on
page 41 and our assessment in relation
toemerging risks on page 45.
As discussed above, our response to these
risks and our actions are embedded within
our operational activities, supported by
dedicated specialists in North America
and the UK. Our ESG operating committee
monitors progress of our ESG-related
initiatives and perform against the targets
we have set ourselves.
The Board has overall responsibility for
risk management, setting risk appetite
and implementation of the risk
management policy – this includes
responsibility for climate-related risks
and actions taken to manage those risks
where relevant. This approach is designed
to enable the Group to take advantage of
attractive opportunities, yet to do so within
the risk appetite of the Board, mindful of
risks which have been identified and any
emerging risks which may impact the
Group. The Group’s risk committee
monitors the actions taken across the
Group to manage the Group’s risk and
ensure that adequate assurance is
obtained over them. In addition, the
Group’s risk committee ensures that risks
have been appropriately assessed in
relation to risk rating.
The Board recognises that climate-related
risks present significant new and
emerging risks to organisations and
therefore are mindful of the need to
continuously consider developments in
this area, both in terms of new risks which
have emerged as well as the change in
their relative significance. Included within
the Group’s considerations is the impact
ofexisting and emerging regulatory
requirements on the Group, such as
potential future limits on emissions,
further details of which we have detailed
within the strategy section above.
Metrics and targets
Our KPI associated with environmental risk
is that of carbon intensity for our Scope 1
and 2 GHG emissions. The basis and
rational for this KPI and our performance
inthe current year and progress over the
prior years is on pages 39 and 68 to 69. The
target for the Group is to reduce our carbon
intensity 35% by 2030 from the level in 2018
(54.0 tCO
2
e/$m on a constant currency
basis), with a shorter-term target to reduce
our carbon intensity 15% by 2024 from the
level in 2018.
In order to achieve this target, we
established a roadmap covering:
− near-term, including lower carbon
vehicle transition, route optimisation,
telematics and sourcing renewable
energy;
− medium-term, including making step
changes on vehicle procurement and
renewal energy generation; and
− long-term, including migration to
alternative energy sources for the Group.
Across various areas, we are working with
our key suppliers to ensure progress in
each of the areas identified.
Furthermore, our carbon intensity KPI,
specifically delivering a carbon intensity
reduction of 15% by 2024, forms part of
the Group’s remuneration arrangements
as one of the performance measures
forthe Group’s Strategic Plan Award,
whichis linked directly to the
objectivesunderpinning the Group’s
Sunbelt 3.0 strategy.
In addition, we have also considered what
other metrics and targets may be relevant
to the Group. In doing so, we have
considered internal areas of focus, the
risks and opportunities analysis
summarised above and external reporting
frameworks, such as the Industrial
Machinery & Goods SASB standard
applicable to the Group, which we report
against within the Group’s Sustainability
report. As such, as part of our ongoing
focus on the environmental impact of the
Group more broadly, we are in the process
of developing other metrics and targets to
monitor and measure our impact in other
areas which are less material to the
Group. These include:
− diversion rate of waste from landfill:
while we have a number of programmes
in place to manage waste across the
business and have reliable data in the
UK relating to waste diversion given the
legislative environment, we are
currently undertaking a waste mapping
exercise in North America to
understand our waste composition in
more detail and working with our waste
management suppliers to gain greater
visibility in our diversion rate of waste
from landfill. This will enable us to track
our progress in the future; and
− water consumption: we are working
with our third-party utility management
supplier to build reliable data based on
utility supplier data so that we can
measure and report on water
consumption across the business.
Details as to our work in these areas is
discussed on page 70.
Greenhouse gas (GHG) emissions
Our Scope 1 and 2 GHG emissions are
disclosed on pages 68 to 69 of this report
and have been determined in line with the
GHG Protocol methodology.
We are working to estimate the Group’s
Scope 3 emissions and understand how
these will evolve going forward. The most
significant components of our Scope 3
emissions relate to our customer’s use
ofour assets during the rental period and
the use of sold product (principally the use
of used equipment after our ownership).
Thisis discussed in more detail within the
Responsible business report on page 70.
Measuring Scope 3 emissions involves
asignificant application of judgement,
inparticular in relation to the use of sold
assets when we dispose of rental assets to
the used equipment market and end of life
treatment of these assets. Accordingly,
our Scope 3 emissions will always be
subject to a significant degree of
estimation uncertainty.
Ashtead Group plc Annual Report & Accounts 2023
81
STRATEGIC REPORT
DYNAMIC
CAPITAL
ALLOCATION
5
Consistent application of our capital allocation
policy to optimise capital deployment for the
benefit of all stakeholders.
Capital expenditure
of$3.8bn
$1.1bn spent on 50
bolt-on acquisitions
Proposed final dividend
of 85.0¢, making 100.0¢
for the year
$261m allocated to share
buybacks in the year
Leverage at 1.6x net debt
to EBITDA, excluding
IFRS 16
2023 highlights
100.0¢
proposed full year dividend per
share (2022: 80.0¢)
1.6x
leverage (2022: 1.5x)
Ashtead Group plc Annual Report & Accounts 2023
82
Dynamic capital allocation
One of the five actionable components of
our strategic plan Sunbelt 3.0 is dynamic
capital allocation. An integral part of this
is our strong balance sheet which gives
usa competitive advantage and positions
us well as we take advantage of the
structural growth opportunities available
in our markets. We accessed the debt
markets twice during the year to
strengthen our balance sheet position
further and ensure we have appropriate
financial flexibility to take advantage of
opportunities in the market. We issued
two sets of $750 million, 10-year,
investment grade notes at around 5.5%.
Following the notes issues, our debt
facilities are committed for an average
ofsix years at a weighted average cost of
5%. This fund raising ensures we can take
full advantage of the growth opportunities
to come.
STRATEGIC REPORT
83
Ashtead Group plc Annual Report & Accounts 2023
The non-financial and sustainability
reporting regulations in section 414CA and
414CB of the Companies Act 2006 require
the disclosure of specific information
relating to environmental matters, the
Company’s employees, social matters,
respect for human rights and anti-
corruption and anti-bribery matters,
asummary of which is set out below.
Environmental matters
We seek to minimise the environmental
impact of everything we do. In addition,
our commitment to improving energy
performance is intended to reduce our
impact on the environment and could
deliver significant cost savings over time.
Further details of our policies, including
disclosure of carbon emission and energy
usage data, are provided on pages 68 to 71.
A summary of our approach to governance,
strategy (including responding to the risks
and opportunities arising from climate
change), risk management and measuring
performance are summarised in our TCFD
statement on pages 76 to 81.
Related principal risks: see
‘environmental’ risk on page 44.
Employees
Our employee policies are designed to
ensure that we recruit the best people, train
them well and look after them so that they
provide the best possible service for our
customers, suppliers and communities.
Furthermore, health and safety policies are
core to our operations and we maintain and
continuously seek to enhance our health
and safety programmes to minimise any
risk to our people.
Specific policies provide equal
opportunities to all of our staff and ensure
that we maintain an inclusive culture.
Employee policies are available to all
employees through the employee
handbooks and on our employee intranet.
Further details of our policies, including
details on our safety programmes,
training and recruitment activities,
isprovided on pages 62 to 67.
Related principal risks: see ‘people’ risk
on page 43.
Social matters
Playing a big role in our local communities
is of crucial importance to our business.
As we expand our market share,
particularly in the US and Canada, we
haveever more impact and influence
overthe communities where we hire
staffand make an economic contribution.
Our responsibility to those communities
increases likewise. The Group has
policiesto support employee volunteering
for programmes which positively impact
our communities.
Further details of our contribution to
society is provided on pages 71 to 74.
Related principal risks: while social
matters are not considered a principal
riskto the Group, we believe there is an
important link between social matters
andthe risk identified in relation to our
people as outlined on page 43.
Human rights
We believe in the rights of individuals and
take our responsibilities seriously to all
our employees and those who may be
affected by our activities. While we do not
manage human rights matters separately,
we continue to assess potential risks and
do not believe they raise particular issues
for the business.
Further details of our policies are provided
on page 75. Our business ethics and
conduct policy, modern slavery and
human trafficking policy and modern
slavery and human trafficking statement
are available on our website.
Related principal risks: see ‘laws and
regulations’ risk on page 44.
Anti-corruption
and anti-bribery
Anti-corruption and bribery policies are
maintained and reviewed on a regular
basis with relevant guidance included
inemployee handbooks and available
onour employee intranet.
Further details of our policies including
details on training required to be
undertaken by our employees, are
provided on page 75.
Related principal risks: see ‘laws and
regulations’ risk on page 44.
In addition, information required in
relation to the Group’s business model,
principal risks, including those which
relate to the matters above, and key
performance indicators are provided
onpages 20 to 27 and pages 40 to 45
oftheAnnual Report.
APPROVAL OF THE STRATEGIC REPORT
The Strategic report set out on pages 1 to 84 was approved by the
Boardon12June 2023 and has been signed on its behalf by:
Brendan Horgan Michael Pratt
Chief executive Chief financial officer
12 June 2023
12 June 2023
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
Ashtead Group plc Annual Report & Accounts 2023
84
DIRECTORS’
REPORT
85
Ashtead Group plc Annual Report & Accounts 2023
DIRECTORS’ REPORT
CONTENTS
86 Chair’s introduction
to Corporate governance
88 Our Board of directors
90 Corporate governance report
97 Audit Committee report
102 Nomination Committee report
103 Remuneration report
122 Other statutory disclosures
124 Statement of directors’
responsibilities
STRONG CORPORATE
GOVERNANCE
Dear Shareholder
As chair, it is my role to ensure that
thegovernance regime remains
appropriately robust and that the Board
operates effectively. I am, therefore,
pleased to introduce the corporate
governance report for 2022/23. This
report details the matters addressed
bythe Board and its committees
duringthe year.
The Group is now two-thirds of the way
through its Sunbelt 3.0 strategic plan
and, as commented previously, is well
ahead of its planned schedule. The
business continues to perform well and
in executing against the Group’s
strategy, the Board continues to
consider all the Group’s stakeholders
and seeks to take actions that support
the Group’s overall purpose of providing
a reliable alternative to ownership for
our customers while providing
sustainable returns to all of our
stakeholders. I believe that our Sunbelt
3.0 strategic investments, underpinned
by our culture, will provide the Group
with the basis for our continuing
development and growth in the years
tocome.
In particular, the Board is focused on
ensuring the sustainable success of
theGroup over the longer term, through
its business model, strategy and
governance structures. We recognise
that good governance is essential in
promoting the success of the business
for the benefit of its members as a
whole and that our governance
environment is underpinned by the
culture of our Group, led by the ‘tone
from the top’ of the organisation
through the actions of the Board and
senior leadership teams. Ensuring a
robust corporate governance
environment is key in supporting the
delivery of our strategy and as such, it
is crucial that our governance
structures keep pace with changes in
the Group so that we can ensure our
development and growth is both
responsible and sustainable. We need
to manage our risks efficiently and
ensure transparency across the
business. I am confident that your
Board is well placed to do that and we
remain committed to maintaining the
highest standards of governance.
In executing our responsibilities,
werecognise that good stakeholder
engagement is important in ensuring
abroad range of views is considered
bythe Board. During the year, the
Board had the opportunity to meet with
team members across the organisation
and I met with a number of investors to
discuss a range of topics. In addition,
the chief executive updates the Board
regularly on operational matters,
including relationships with customers
and suppliers.
Areas of Board focus
The Board has played an active role
inthe Group’s delivery against its
strategic objectives, further details of
which are set out within the Strategic
review. In addition, the Board has
invested significant time over the last
year in reviewing and assessing:
− our operating model and structure
toensure they remain fit for
purposeas the business grows
andmarkets change;
− the effectiveness of our health and
safety practices and identifying
areasfor improvement;
− our key management resource to
ensure it remains motivated and
appropriately rewarded;
− succession planning and ongoing
senior recruitment;
− the effectiveness of our capital
structure and capital allocation
priorities;
− the importance of good corporate
governance in the long-term
sustainable success of a company;
and
− our cyber security policies and
procedures to ensure they remain
fitfor purpose.
Compliance
We endeavour to monitor and comply
with ongoing changes in corporate
governance and evolving best practice
in this area. I am pleased to report that
the Company has complied in full
throughout the year with the provisions
set out in the Code, issued by the
Financial Reporting Council (‘FRC’)
andavailable to view at www.frc.org.uk.
A summary of how we have applied the
principles set out in the Code is
presented in the table opposite.
Inaddition, I can confirm this report
provides a fair, balanced and
understandable view of the Group’s
position and prospects.
PAUL WALKER
Chair
PAUL WALKER
Chair
Ashtead Group plc Annual Report & Accounts 2023
86
CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE
The 2018 UK Corporate Governance Code
The governance section has been set out to illustrate how we have applied the
principles of the Code together with information contained elsewhere in the
Annual Report. Further information can be found as follows:
Board leadership and company purpose Further information
A. Effective and entrepreneurial board Pages 90 and 91
B. Purpose, values and culture Page 90
C. Board framework and resources Page 94
D. Board engagement with stakeholders Page 91
E. Workforce policies and practices Page 91
Division of responsibilities
F. Board roles Page 92
G. Division of responsibilities Pages 92 and 93
H. Commitment to the Board Page 93
I. Operation of the Board Page 94
Composition, succession and evaluation
J. Appointments to the Board Pages 94 and 95
K. Board skills, experience and knowledge Page 94
L. Board evaluation of effectiveness Pages 94 and 95
Audit, risk and internal control
M. Independence and effectiveness of internal and external audit Pages 99 and 101
Integrity of financial and narrative statements
N. Fair, balanced and understandable assignment Page 100
O. Internal control framework and risk management Page 96
Remuneration
P. Remuneration designed to support purpose and strategy Pages 103 and 104
Q. Remuneration policy Page 105
R. Remuneration outcomes Page 103
Ashtead Group plc Annual Report & Accounts 2023
87
DIRECTORS’ REPORT
1. PAUL WALKER, 66
N
F
INDEPENDENT NON-EXECUTIVE CHAIR
Appointed to Board
July 2018
Appointment to current role
Paul Walker was appointed as a non-executive
director in July 2018 and non-executive chair in
September 2018.
Skills
Paul spent 16 years as chief executive officer of The
Sage Group plc (‘Sage’), giving him a deep insight
of the challenges of running a global business. He
has a strong financial background and high-level
non-executive experience, which adds to the
Board’s strength.
Experience
Paul’s roles at Sage included chief executive
officer, finance director and financial controller. He
has also been a non-executive director at Diageo
plc, Experian plc, Halma plc, Sophos Group plc and
MyTravel Group plc.
Qualifications
– Graduated in economics from York University
– Chartered accountant (UK)
Other roles
Non-executive chair of RELX plc.
Nationality
British
2. BRENDAN HORGAN, 49
F
CHIEF EXECUTIVE
Appointed to Board
January 2011
Appointment to current role
Brendan Horgan was appointed as chief executive
in May 2019, having served as chief operating
officer of the Group since January 2018 and as the
chief executive of Sunbelt US and a director since
January 2011.
Skills
Brendan has worked in the business for more than
25 years and has a detailed knowledge of the
operations and brings strong leadership and
management skills to his role.
Experience
Brendan joined Sunbelt in 1996 and has held a
number of senior management positions including
chief sales officer and chief operating officer.
Qualifications
– Graduated in business from Radford University
Other roles
None
Nationality
American
3. MICHAEL PRATT, 59
F
G
CHIEF FINANCIAL OFFICER
Appointed to Board
April 2018
Appointment to current role
Michael Pratt was appointed as chief financial
officer in April 2018.
Skills
Michael is a qualified accountant with 19 years’
experience with Ashtead within finance roles giving
him a detailed understanding of the Group’s
business. He has played a key role in defining the
Group’s capital structure.
Experience
Michael was deputy group finance director and
group treasurer from 2012 having joined the Group
from PwC in 2003.
Qualifications
– Graduated in civil engineering from the
University of Birmingham.
– Chartered accountant (UK)
Other roles
None
Nationality
British
4. ANGUS COCKBURN, 60
A
N
R
SENIOR INDEPENDENT DIRECTOR
Appointed to Board
October 2018
Appointment to current role
Angus Cockburn was appointed as a non-executive
director in October 2018 and as senior independent
non-executive director in January 2019.
Skills
Angus brings knowledge of the rental market
andspecialty businesses, along with a good
understanding of the associated strategic
andfinancial issues of operating an
internationalbusiness with a substantial
NorthAmerican presence.
Experience
Angus was chief financial officer of Serco Group
plc between October 2014 and April 2021. He has
also been a non-executive director of GKN plc and
Howden Joinery Group plc, as well as chief
financial officer and interim chief executive of
Aggreko plc.
Qualifications
– Graduated in Business Studies and Accounting
from the University of Edinburgh and MBA from
IMD Business School
– Chartered accountant (UK)
Other roles
Non-executive chair of James Fisher and Sons plc
and non-executive director of Securities Trust of
Scotland plc and Edrington Group Limited.
Nationality
British
OUR BOARD OF DIRECTORS
A
Audit
N
Nomination
R
Remuneration
F
Finance and Administration
G
Group Risk
Denotes chair
Committee membership
1
2
3
4
Ashtead Group plc Annual Report & Accounts 2023
88
5. JILL EASTERBROOK, 52
A
N
R
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed to Board
January 2020
Appointment to current role
Jill Easterbrook was appointed as a non-executive
director in January 2020.
Skills
Jill brings strong digital experience within retail
environments to the Board.
Experience
Jill was previously the chief executive officer of JP
Boden & Co and formerly held a number of senior
positions with Tesco PLC.
Qualifications
– Graduated in economics from Leeds University.
Other roles
Non-executive chair of Headland Consultancy and
non-executive director of Auto Trader plc, UP
Global Sourcing Holdings plc and Tracsis PLC.
Nationality
British
6. TANYA FRATTO, 62
A
N
R
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed to Board
July 2016
Appointment to current role
Tanya Fratto was appointed as a non-executive
director in July 2016.
Skills
Tanya has wide experience in product innovation,
sales and marketing and engineering in a range of
sectors and has extensive knowledge of operating
in the US.
Experience
Tanya enjoyed a 20-year career with General
Electric where she ran a number of businesses.
Qualifications
– Graduated in electrical engineering from the
University of South Alabama.
Other roles
Non-executive director of Advanced Drainage
Systems Inc.
Nationality
American
7. RENATA RIBEIRO, 51
A
N
R
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed to Board
January 2022
Appointment to current role
Renata Ribeiro was appointed as a non-executive
director in January 2022.
Skills
Renata brings strong commercial and digital
experience to the Board.
Experience
Renata is currently Senior Vice President,
Operations Strategy for Carnival Corporation
&plcwhere she has worked since 2008.
Qualifications
– Graduated in business administration from
Fundação Getuilo Vargas, São Paulo and an
MBAin business administration from Wake
Forest University.
Other roles
Senior Vice President, Operations Strategy for
Carnival Corporation & plc.
Nationality
Brazilian and American
8. LUCINDA RICHES, 61
A
N
R
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed to Board
June 2016
Appointment to current role
Lucinda Riches was appointed as a non-executive
director in June 2016.
Skills
Lucinda has extensive investment banking and
capital markets experience.
Experience
Lucinda was formerly global head of Equity Capital
Markets and a member of the board of UBS
Investment Bank. She has held a range of
non-executive roles with public companies.
Qualifications
– Graduated in philosophy, politics and economics
from Oxford University and a Masters in political
science from the University of Pennsylvania.
Other roles
Non-executive chair of Peel Hunt Limited and
Greencoat UK Wind Plc and non-executive director
of LGT Capital Partners.
Nationality
British
9. LINDSLEY RUTH, 52
A
N
R
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed to Board
May 2019
Appointment to current role
Lindsley Ruth was appointed as a non-executive
director in May 2019.
Skills
Lindsley brings extensive knowledge of our end
markets to the Board, particularly North America.
Experience
Lindsley was previously chief executive officer of
RS Group plc. He has also held senior positions
with TTI Inc. and Solectron Corporation.
Qualifications
– Graduated in engineering from Texas A&M
University.
Other roles
Member of the CBI’s International Trade Council.
Nationality
American
Details of the directors’ contracts,
emoluments and share interests can
be found in the Directors’
remuneration report.
5
7
9
6
8
Ashtead Group plc Annual Report & Accounts 2023
89
DIRECTORS’ REPORT
Board leadership and company
purpose
Role of the Board
The Board is responsible for setting the
Group’s strategy and ensuring the
necessary resources and capabilities are
in place to deliver its strategic aims and
objectives. It determines the Group’s key
policies and reviews management and
financial performance. The Group’s
governance framework is designed to
facilitate a combination of effective,
entrepreneurial and prudent management
of the business.
The Group’s risk management framework,
as detailed on pages 40 to 41, ensures that
the Board considers risks on an ongoing
basis and that it reviews formally the
Group’s risk register on an annual basis
including consideration of emerging risks.
The Group’s key performance indicators,
as detailed on pages 38 to 39, also enable
the Board to have visibility as to the
progress the Group is making against our
strategic priorities.
Company purpose, values and culture
One of the primary responsibilities of the
Board is to ensure that the Group delivers
against its purpose, which is “to provide a
reliable alternative to ownership for our
customers across a wide range of
applications and markets.”
In setting, reviewing and ensuring the
implementation of the Group’s strategy,
the Board ensures that the objectives of
our purpose are met while taking into
account risks and opportunities facing the
Group and its long-term sustainability.
These activities are underpinned by the
Group’s values and culture. We believe
that there are four key cornerstones of our
culture which drive the success of our
Group: a priority on safety; ensuring the
best levels of customer service; working
in partnership with our customers,
suppliers and communities to make
ithappen; and being innovative in our
approach both in relation to products
andmarkets.
The Board is responsible for the culture of
the Group, with its role being to influence
and monitor culture to ensure that our
policy, practices and behaviour throughout
our entire organisation are aligned with
the Group’s purpose, values and strategy.
Where issues are identified, it is the
Board’s responsibility to ensure corrective
action is taken.
During the year, the Board has monitored
culture in a number of ways, including:
− receiving health and safety statistics at
all Board meetings, together with
regular updates on the Group’s activities
to enhance further the culture of safety
within the business;
− through the Group’s employee
engagement activities including
employee surveys, feedback on the
Group’s diversity, equity and inclusion
programmes and through direct
engagement with employees during the
course of the year;
− monitoring findings from the Group’s
external audit, internal audit and
performance standards functions;
− receiving regular updates on whistle-
blowing matters; and
− reviewing key policies including the
annual updates to the Group’s business
ethics and conduct policy.
The principal matters considered by the Board during
2022/23were:
Strategic and financial review Further information
Review of Group performance
See strategic review on pages 8 to 11 and
financial review on pages 51 to 57
Review of health and safety
See health and safety review on pages
62 to 63
Review of the strategic plan
See pages 28 to 35
Review of the Group’s succession plans
See page 102
Review of M&A opportunities Acquisitions completed in year detailed
inNote 27 of the financial statements
Review of the Group’s share buyback
programme
See page 35
Received updates on the Group’s diversity,
equity and inclusion initiatives
See pages 66 and 67
Review and approval of the Group’s Modern
Slavery Act statement and related policies
See www.ashtead-group.com
Risks
Ongoing monitoring of risks See pages 40 to 45
Received updates from Group Risk
Committee See page 40
Completed formal annual review of Group’s
risk register See page 40
Completed annual insurance review See page 55
Governance
Shareholder analysis
Review of feedback from shareholders
andanalysts
Shareholder engagement following AGM
See page 103
Reports from committees
Review of results announcements All results announcements available
onthe Group’s website
Board evaluation undertaken
See pages 95 and 96
CORPORATE GOVERNANCE REPORT
Ashtead Group plc Annual Report & Accounts 2023
90
Summary of the Board’s work during
the year
At each board meeting, the Board
receives:
− a report from the chief executive
providing an update on strategic,
operational, business development and
health and safety matters, supported
byreports from the businesses;
− a report from the chief financial officer
on the financial performance and
position of the Group, including
treasurymatters; and
− an update from the committees of
theBoard on matters discussed at
theirmeetings.
Engagement with our stakeholders
An overview of the nature and extent of our
engagement with stakeholders is provided
on pages 48 and 49 of the Strategic report.
In relation to the Board’s activities, these
are discussed below.
Workforce engagement
The Group employs c. 25,000 individuals
in North America, the UK and Europe and
as such, ensuring efficient, two-way
workforce engagement is critical to the
success of the business. Our workforce is
central to the decisions the Board makes
in relation to our employment policies, our
culture and our strategy.
We considered the methods of workforce
engagement proposed under the Code in
conjunction with our existing methods of
engagement. Given the nature and extent
of our workforce and its geographical
distribution across a large number of
locations, we concluded that no single
method of engagement was suitable to
ensure that we engaged appropriately
across the entire workforce. Instead we
believe that a combination of methods of
engagement is appropriate, consistent
with the approach we have taken
previously, including:
− employee surveys – the Board received
updates on the actions taken as a result
of and feedback from employee surveys.
The latest employee survey results in
North America received an 84%
participation rate with an 88%
engagement score, while the UK survey
received a participation rate of 86% with
an 80% engagement score;
− annual strategic review – in October
2022 and April 2023, senior North
American and UK management
attended strategy review and budget
review meetings providing the Board
with the opportunity to meet individuals,
discuss the business and strategic
initiatives in detail and obtain detailed
insight into market dynamics;
− ‘town hall’ events – throughout the year,
a series of ‘town hall’ events were held
in North America and the UK which
provided employees with the
opportunity to be briefed on the latest
developments by executive
management across the business and
raise any questions or concerns; and
− regular update calls – business unit
level calls are held on a regular basis
to provide employees with insight into
the performance of the business and
ongoing business initiatives, led by
senior executives of the North
American and UK businesses.
Thesecalls provide employees with
theopportunity to raise any questions
or concerns in-person or virtually.
In addition, a rolling programme of
presentations from management across
the Group, on a range of topics, ensures
the Board has exposure to different
employees and business functions during
the year.
Engagement with our customer
andsuppliers
We have a range of key customer and
supplier stakeholders which the Board
considers when taking important
decisions. Engaging with these
stakeholders is therefore critical to the
Group and a key priority of the Board, and
is achieved through a variety of means.
Details of our engagement with our
customers and suppliers is provided in
theStrategic report on pages 48 and 49,
the Responsible business report on pages
63 and 75 and throughout this Corporate
governance report. The chief executive
updates the Board on a regular basis on
operational matters, including feedback
from customers and suppliers and
furtherinformation is provided through
strategic updates.
Engagement with our communities
We seek to make a positive contribution
to the communities in which we operate,
both through our economic impact but
also as a result of our community
initiatives and the way in which we are
involved in our communities and the
support we can provide in a time of need.
Accordingly, it is important that the Board
considers our communities in developing
and implementing our strategy.
Details of our engagement with
communities is provided in the Strategic
report on pages 48 and 49 and within the
Responsible business report on pages 72
to 74.
Dialogue with shareholders
We engage actively with analysts and
investors and are open and transparent in
our communications. This enables us to
understand what analysts and investors
think about our strategy and performance
as we drive the business forward. The
Board is updated regularly on the views
of shareholders through briefings and
reports from those who have had
interaction with shareholders including
the directors and the Company’s brokers.
Regular dialogue is maintained with
analysts and investors through telephone
calls, meetings, presentations,
conferences, site visits and ad hoc events.
During the year, senior management
conducted over 470 virtual and in-person
meetings and calls and attended four
broker conferences, with investors across
all geographies. This includes regular
interaction with private investors who
often contact the Group with questions.
The chair and the senior independent
non-executive director are available to
meet institutional shareholders to
discussany issues or concerns in relation
to the Group’s governance and strategy.
Following the 2022 AGM, the chair and
thechair of the remuneration committee
engaged with shareholders, targeting
inparticular those identified as voting
against the directors’ annual report
onremuneration.
The Group’s results and other news
releases are published via the London
Stock Exchange’s Regulatory News
Service. In addition, these news releases
are published in the Investor Relations
section of the Group’s website at www.
ashtead-group.com. Shareholders and
other interested parties can subscribe to
receive these news updates by email
through registering online via the website.
In addition, all results and capital markets
presentations are webcast live (and for
playback) on the website for shareholders,
analysts, employees and other interested
stakeholders who are unable to attend
inperson.
Ashtead Group plc Annual Report & Accounts 2023
91
DIRECTORS’ REPORT
− Annual results
announcement and
presentation
− Bondholder call
− Investor roadshow
following annual results
presentation
− First quarter results
announcement and
presentation
− Bondholder call
− Annual General Meeting
− Conference calls with
investors following
Q1results
− Half year results
announcement and
presentation
− Bondholder call
− Investor roadshow following
half year results
presentation
− Third quarter results
announcement and
presentation
− Bondholder call
− Conference calls with
investors following Q3
results
The Annual General Meeting
The 2023 AGM will be held in London on Wednesday,
6September 2023. An update on first quarter trading
willbeprovided during the meeting.
We continue to recognise the importance of ongoing
engagement with our shareholders who will be encouraged to
raise questions on the business at the AGM. Shareholders are
encouraged to submit questions in advance of the meeting via
our website (www.ashtead-group.com) and where appropriate
we will provide written answers to questions and will publish
answers to frequently asked questions on the website.
All resolutions at the AGM will be put to a vote on a poll, rather
than being decided on a show of hands. The Board believes
that this results in a more accurate reflection of the views of
shareholders and ensures that their votes are recognised
whether or not they are able to attend the meeting. On a poll,
each shareholder has one vote for every share held. The
results of the voting on the resolutions will be announced to
the London Stock Exchange and published on our website as
soon as possible after the conclusion of the meeting. Notice of
the AGM will be sent to shareholders at least 20 working days
before the meeting.
Division of responsibilities
Board roles and division of responsibilities
An appropriate division of responsibilities between Board members is critical in delivering the Group’s strategic objectives. A key
element in delivering this is a strong working relationship between the directors and, in particular, the chair, chief executive and chief
financial officer.
A summary of the roles of the Board members are set out below:
Chair Paul Walker
Independent non-executive chair, responsible for leadership of the Board and acts
as a sounding board for the chief executive. Agrees Board agendas and ensures its
effectiveness by requiring the provision of timely, accurate and clear information on
all aspects of the Group’s business, to enable the Board to take sound decisions and
promote the success of the business.
Chief executive Brendan Horgan
Responsible for developing the strategy for the business, in conjunction with the
Board, ensuring it is implemented, and the operational management of the business.
Chief financial officer Michael Pratt
Supports the chief executive in developing and implementing the strategy and
isresponsible for the reporting of the financial and operational performance of
thebusiness.
Senior independent non-
executive director
Angus Cockburn
Provides a sounding board for the chair and is available to shareholders, if they
have reason for concern that contact through the normal channels of chair or chief
executive has failed to resolve.
Independent non-executive
directors
Jill Easterbrook
Tanya Fratto
Renata Ribeiro
Lucinda Riches
Lindsley Ruth
Provide a constructive contribution to the Board by providing objective challenge
andcritique for executive management based on insights drawn from their
broadexperience.
Corporate governance report continued
June 2022
September 2022
December 2022
March 2023
Dialogue with shareholders
Ashtead Group plc Annual Report & Accounts 2023
92
The Board and its committees
Chaired by Angus
Cockburn. Monitors
and reviews the
Group’s financial
reporting, relationship
with the external
auditor, internal
control, internal audit
and risk management.
See Audit Committee
report on page 97 for
further details.
Audit
Committee
Chaired by Brendan
Horgan. Responsible
for routine finance and
administrative matters
between Board
meetings subject to
clearly defined limits
delegated by the
Board.
See below for
furtherdetails.
Finance and
Administration
Committee
Chaired by Paul
Walker. Monitors and
reviews the Board’s
structure, size,
composition and
balance and oversees
the appointment and
reappointment of
directors.
See Nomination
Committee report
onpage 102 for
furtherdetails.
Nomination
Committee
Chaired by Michael
Pratt. Responsible for
monitoring of risk
across the Group, the
implementation of our
risk framework and
reporting of Group risk
and mitigating actions.
See below for
furtherdetails.
Group Risk
Committee
Chaired by Lucinda
Riches. Responsible
for determining the
Group’s remuneration
policy and its
application, with
specific responsibility
for the remuneration of
the chair and executive
directors.
See Remuneration
Committee report
onpage 103 for
furtherdetails.
Remuneration
Committee
Delegated authority
There is a schedule of matters reserved
for the Board for decision while other
matters are delegated to Board
committees. Matters reserved for the
Board include:
− treasury policy;
− acquisitions and disposals;
− appointment and removal of directors or
the company secretary;
− appointment and removal of the auditor;
− approval of the annual accounts and the
quarterly financial reports to
shareholders;
− approval of the annual budget;
− approval of the issue of shares and
debentures;
− the setting of dividend policy; and
− the buyback of shares.
The Board
Board committee Non-Board committee
The Board is responsible for setting the Group’s strategy and
ensuring the necessary resources and capabilities are in place to
deliver the strategic aims and objectives.
Board committees
The Board has standing Audit, Nomination
and Remuneration Committees. The
membership, roles and activities of the
Audit and Nomination Committees are
detailed on pages 97 to 102 and the
Remuneration Committee in the report
onpages 103 to 121. Each committee
reports to, and has its terms of reference
agreed by, the Board. The terms of
reference of these committees are
available on our website.
Finance and Administration Committee
The Finance and Administration
Committee comprises Brendan Horgan
(chair), Michael Pratt and Paul Walker.
TheBoard of directors has delegated
authority to this committee to deal with
routine financial and administrative
matters between Board meetings. The
Committee meets as necessary to
perform its role and has a quorum
requirement of two members with certain
matters requiring the participation of the
chair, including, forexample, the approval
of material announcements to the London
Stock Exchange.
Group Risk Committee
The Group Risk Committee is chaired
by Michael Pratt and comprises
representatives from Sunbelt in North
America and the UK, as well as the Group
head of internal audit and risk officer,
Group managing director of ESG and
Group general counsel. The work of the
Group Risk Committee is supported by the
Risk Committees of Sunbelt in North
America and the UK, which meet regularly
to ensure continued focus on risks and
mitigating actions. Further details of the
work of the Group Risk Committee are
provided in the Responsible business
report on page 61.
Commitment to the Board
As part of the appointment process,
prospective directors are required to
confirm that they will be able to devote
sufficient time to the Company to
discharge their responsibilities effectively.
Furthermore, all directors are required
toinform the Company of changes in
theircommitments to ensure that they
continue to be able to devote sufficient
time to the Company.
Ashtead Group plc Annual Report & Accounts 2023
93
DIRECTORS’ REPORT
Operation of the Board
The principal activities of the Board are
conducted at regular scheduled meetings
of the Board and its committees. The
Board normally meets six times a year,
with at least two of these meetings being
held in North America. The Board and its
committees conducted successfully all its
routine and non-routine business
throughout the year. Additional ad hoc
meetings and calls are arranged outside
the scheduled meetings to take decisions
or receive updates as required.
The chair and chief executive maintain
regular contact with the other directors to
discuss matters relating to the Group and
the Board receives regular reports and
briefings to ensure the directors are
suitably briefed to fulfil their roles.
Additionally, detailed management
accounts are sent monthly to all Board
members and, in advance of all Board
meetings, an agenda and appropriate
documentation in respect of each item to
be discussed is circulated.
The company secretary is responsible for
ensuring compliance with board and
committee procedures and advising the
Board on all governance-related matters.
The company secretary also supports the
chair in the delivery of information to
directors in advance of board and
committee meetings and acts as a key
point of contact for the chair and non-
executive directors.
Each director has access to the company
secretary and is able to seek independent
advice at the Company’s expense.
The appointment and removal of the
company secretary is a matter reserved
for the Board.
Composition, succession and
evaluation
Composition of the Board
The Board comprises the chair, the
chiefexecutive, the chief financial officer,
the senior independent non-executive
director and five other independent
non-executive directors.
Each member of the Board must be able
to demonstrate the skills, experience and
knowledge required to contribute to the
effectiveness of the Board. Short
biographies of the directors are given on
pages 88 and 89 detailing the skills,
experience and knowledge of each of the
Board members. The directors are of the
view that the Board and its committees
consist of directors with the appropriate
balance of skills, experience,
independence and knowledge of the
Groupto discharge their duties and
responsibilities effectively.
Maintaining the appropriate mixture of
skills, experience and knowledge is
important to the Board, including ensuring
that we address issues of diversity in
terms of skills, gender, ethnicity and
experience relevant to our business.
TheNomination Committee is responsible
for reviewing the structure, size and
composition of the Board and making
recommendations to the Board on any
changes required.
Details of the work of the Nomination
Committee in relation to the composition of
the Board are provided in the Nomination
Committee report on page 102.
Non-executive directors
In the recruitment of non-executive
directors, it is the Company’s practice
toutilise the services of an external
search consultancy.
Non-executive directors are appointed for
specified terms not exceeding three years
and are subject to annual re-election and
the provisions of the Companies Act 2006
relating to the removal of a director.
The approval of the Board is required
before a non-executive can take on other
non-executive director roles.
Board diversity policy
Across the Group, we aim to ensure that
our workforce has a broad range of skills,
backgrounds and experience, while
ensuring that we appoint the best people
for the relevant roles. At Board level,
under the direction of the chair, the
Groupapplies these same principles.
As a result, the Group seeks to maintain
aboard where the skills, backgrounds
and experiences of the non-executive
directors complement those of the
executive directors. In this way, we aim
toensure that the skills, backgrounds
andexperiences represented on the Board
and its committees reflect the business
environments in which we operate and
bring experience of areas of development
for the Group, such as in the areas of
technology and logistics.
We do not have formal targets or
quotasassociated with diversity for the
composition of the Board, but instead
focus on ensuring the best individuals
areappointed who meet the Group’s
needsfrom as wide a range of
backgrounds as possible to facilitate
theformulation and implementation of
theGroup’s strategy, while benefitting
from the long-term industry experience
ofour executive directors.
Nevertheless, we are mindful of the
recommendations of the FTSE Women
Leaders Review on gender diversity
andthe Parker Review on ethnic diversity
and believe that over time, greater
diversity will be reflected throughout our
organisation, including at board level. Our
current position is set out in the Board
diversity and inclusion statement below.
Board diversity and inclusion
statement
As shown in the tables on the next page,
as at 30 April 2023, we had 44% female
Board members, compared with a target
set out in the FTSE Women Leaders
Review of 40%, and one member of the
board is from a minority ethnic
background, in line with the target set out
by the Parker Review. Nevertheless, we
recognise that there is further progress to
be made, as none of the senior positions
on the Board (chair, senior independent
Corporate governance report continued
Board attendance table
Board Audit Nomination Remuneration
Chair
Paul Walker 6/6 5/5
1
2/2 –
Executive
Brendan Horgan 6/6 5/5
1
– –
Michael Pratt 6/6 5/5
1
– –
Non–executive
Angus Cockburn 6/6 5/5 2/2 4/4
Jill Easterbrook 6/6 5/5 2/2 4/4
Tanya Fratto
2
4/6 4/5 2/2 4/4
Renata Ribeiro 6/6 5/5 2/2 4/4
Lindsley Ruth
2
5/6 4/5 1/2 3/4
Lucinda Riches 6/6 5/5 2/2 4/4
1 While not members of the Audit Committee, Paul Walker, Brendan Horgan and Michael Pratt attended
all meetings during the year.
2 Tanya Fratto and Lindsley Ruth were unable to attend certain board, audit, nomination and
remuneration committee meetings during the year due to ill health.
Ashtead Group plc Annual Report & Accounts 2023
94
director, chief executive or chief financial
officer) is held by a woman. The individuals
within these roles were appointed with
afocus on ensuring the best individuals
who met the Group’s needs were selected.
As part of the Group’s succession planning
activities, the Group is focused on
ensuring a broad and diverse talent pool
isin place, while being sympathetic to
female representation in one of the senior
positions on the Board.
In preparing the data shown in the tables
to the right, we surveyed individual board
members on aself-identifying basis via a
written questionnaire. This data is used for
statistical reporting purposes and
provided with consent. Board members
are asked to identify their gender and
ethnicity based on the categories set
outinthe tables to the right.
Election of directors
All directors will retire at this year’s AGM
and will offer themselves for re-election
inaccordance with the Code.
Board evaluation
The performance of the chair, chief
executive, the Board and its committees
isevaluated formally annually against,
amongst other things, their respective
roleprofiles and terms of reference.
Theexecutive directors are evaluated
additionally against the agreed budget for
the generation of revenue, profit and value
to stakeholders.
In accordance with the Code, the Board
and its committees’ performance is
evaluated by an external third party every
three years, and as such, an external
evaluation was undertaken in the current
year by Independent Audit, a company
which has no connection with Ashtead or
the directors.
The 2022/23 Board evaluation comprised
a series of in-depth interviews with all
Board members and a number of the
senior management team, together with
observation of the Board’s conduct in
meetings and a review of the
documentation circulated in advance
ofthe Board and committee meetings.
The report of the external reviewer,
whichincluded conclusions and
recommendations, was presented to a
meeting of the Board in April 2023. The
overall conclusion was that the Board
operated in an efficient and effective
manner. In addition, certain areas of
focus were identified to enhance further
the effectiveness of the Board in the
future. The report was considered and
debated by the Board and various action
points were agreed including ‘an
enhanced’ focus on maintaining a
high-performing management team,
Reporting table on gender identity representation
Number
of Board
members
Percentage of
the Board
Number
of senior
positions on
the Board
Number in
executive
management
Percentage
of executive
management
Men 5 56% 4 13 93%
Women 4 44% – 1 7%
Not specified/prefer
not to say – –% – – –%
Reporting table on ethnicity representation
Number
of Board
members
Percentage of
the Board
Number
of senior
positions on
the Board
Number in
executive
management
Percentage
of executive
management
White British or other
White 8 89% 4 13 93%
Mixed/multiple ethnic
groups – – % – – – %
Asian/Asian British – – % – 1 7%
Black/African
Caribbean/Black
British – – % – – – %
Other ethnic group,
including Arab 1 11% – – – %
Not specified/prefer
not to say – – % – – – %
Board development and training
All newly appointed directors undertake an induction to all parts of the Group’s
business. This includes visits to the North American and UK businesses and meetings
with their management teams. The company secretary also provides directors with an
overview of their responsibilities as directors, corporate governance policies and
Board policies and procedures.
The chair and chief executive assess regularly the development needs of the Board as
a whole with the intention of identifying any additional training requirements.
Detailed induction
meetings with Group,
North American and
UK management
teams
Access to
external advisors
including on a
one-to-one basis
Visits to profit centres
and support offices
Training
requirements
assessed
and provided
Detailed
presentations by
and meetings with
management
Regular update on
responsibilities,
corporate governance
policies and Board
procedures
BOARD
INDUCTION AND
DEVELOPMENT
Ashtead Group plc Annual Report & Accounts 2023
95
DIRECTORS’ REPORT
planning for the future composition of the
Board and to develop further the risk and
assurance framework. Based on the
report, the Board concluded that the
performance of the Board and its
committees has been satisfactory.
In accordance with the Code, the non-
executive directors (including the chair)
met in the absence of the executive
directors to appraise the performance of
the executive directors and management
and the non-executive directors, led by
thesenior independent director, met in
theabsence of the chair to appraise
hisperformance.
Audit, risk and internal control
Audit Committee
The Board has delegated responsibility for
oversight of corporate reporting, risk
management and internal control and
maintaining an appropriate relationship
with the Group’s internal and external
auditors to the Audit Committee. The Audit
Committee report on pages 97 to 101
contains full details of the role and
activities of the Audit Committee.
Financial and business reporting
The Board is committed to providing
stakeholders with a fair, balanced and
understandable assessment of the
Group’s position and prospects. This is
achieved through the Strategic report,
which includes an explanation of the
Group’s business model, and other
information included within this Annual
Report. The responsibilities of the
directors in respect of the preparation
ofthis Annual Report are set out on page
124 and the Auditor’s report on page 126
includes a statement by Deloitte about its
reporting responsibilities. As set out on
page 123, the directors are of the opinion
that the Group is a going concern.
Internal control framework and
risk management
The Board is responsible for the Group’s
internal control framework and risk
management. It has established a
process for identifying, evaluating and
managing the principal risks faced by the
Group and in identifying and responding
to emerging risks. This robust process
has been in place for the full financial
year, is ongoing and is consistent with the
FRC’s ‘Guidance on Risk Management,
Internal Control and Related Financial
and Business Reporting’ published in
2014. Under its terms of reference, the
Group Risk Committee meets semi-
annually or more frequently if required.
As described more fully on pages 40 to 45,
the Group reviews and assesses the risks
it faces in its business, changes in
principal risks facing the Group and how
these risks are managed, with
consideration given to the Board’s
assessment of risk appetite. These reviews
are conducted throughout the year in
conjunction with the management teams of
each of the Group’s businesses and are
documented in an annual risk assessment,
including the updated risk register. The
reviews consider whether any matters have
arisen since the last report was prepared
which might indicate omissions or
inadequacies in that assessment. It also
considers whether, as a result of changes
in either the internal or external
environment, any significant new risks have
arisen or whether there are any emerging
risks which may impact the Group. The
Group Risk Committee report for 2023 was
presented to, discussed and endorsed by
the Audit Committee on 11 May 2023 and
the Group Board on 12 June 2023.
The Board monitors the risk management
framework and internal control systems
on an ongoing basis and reviews their
effectiveness formally each year.
The Group follows a three lines of defence
approach to risk management with
executive management responsible for the
oversight and management of the first and
second lines of defence while the Audit
Committee takes primary responsibility
for the third line of defence. The Audit
Committee is supported in this activity by
the Group’s performance standards
function and outsourced internal audit.
The Board reassesses continually the
effectiveness of the Group’s control
framework and seeks to identify ways in
which to further improve and strengthen it.
As detailed further on page 101, as part of
the Board’s monitoring, through the Audit
Committee, it received reports from the
operational audit teams and the recently
appointed head of internal audit as to the
existence and operation of controls, how
those controls have been monitored
throughout the year and considered the
internal control improvement
recommendations made by the Group’s
internal auditors and its external auditor
and management’s implementation plans.
The control system includes written
policies and control procedures, clearly
drawn lines of accountability and
delegation of authority, and
comprehensive reporting and analysis
against budgets and latest forecasts.
In a group of the size, complexity and
geographical diversity of Ashtead, minor
breakdowns in established control
procedures can occur. There are
supporting policies and procedures for
investigation and management of control
breakdowns at any of the Group’s stores or
elsewhere. The Audit Committee also
meets regularly with the internal and
external auditor to discuss their work.
The Board considers that the Group’s
internal control systems are designed
appropriately to manage, rather than
eliminate, the risk of failure to achieve its
business objectives. Any such control
system, however, can only provide
reasonable and not absolute assurance
against material misstatement or loss.
Remuneration
Remuneration Committee
The Board has delegated responsibility for
developing remuneration policy and fixing
the remuneration packages of individual
directors to the Remuneration Committee.
The Remuneration Committee report on
pages 103 to 121 contains full details of
therole and activities of the
RemunerationCommittee.
Business operations
− Implementation of
policies and
procedures
− Operational control
activities
First line
of defence
1 2 3
Corporate oversight
− Establishment of
policies and
procedures
− Monitoring of control
activities
− Internal assurance
function
− Group Risk
Committee
Second line
of defence
Independent assurance
− Internal audit
− Operational audit
(Performance
Standards)
Third line
of defence
Corporate governance report continued
Ashtead Group plc Annual Report & Accounts 2023
96
I am pleased to introduce the report of
the Audit Committee for 2022/23. The
Committee assists the Board in
discharging its responsibility for
oversight and monitoring of financial
reporting, risk management and
internal control. As chair of the
Committee, it is my responsibility to
ensure that the Committee fulfils its
responsibilities in a rigorous and
effective manner. The Committee’s
agenda is designed, in conjunction with
the Board’s, to ensure that all
significant areas of risk are covered and
to enable it to provide timely input to
Board deliberations.
In 2022/23, the Committee’s main
activities related to ensuring the
integrity of financial reporting, the
continued effectiveness of the Group’s
financial controls and assurance
programme, and reviewing the Group’s
internal audit arrangements, in
conjunction with the new in-house head
of internal audit, who joined the Group
in September 2022, and receiving both
reports from the Group Risk Committee
and detailed presentations on specific
Group risks.
In addition, the Committee has
maintained regular dialogue with the
senior management team throughout
the year to understand how business
processes and controls continue to
operate effectively to ensure the timely
and accurate preparation of financial
information.
I am satisfied that the Committee was
provided with high quality and timely
material to allow proper consideration
to be given to the topics under review.
Iam also satisfied that the meetings
were scheduled to allow sufficient
timeto ensure all matters were
considered fully.
For the forthcoming year, the
Committee will continue to focus on the
integrity of financial reporting and the
effectiveness of the Group’s controls
and assurance programme.
Additionally, the Committee will
oversee the transition of the external
auditor from Deloitte to PwC for the
2023/24 year end.
One of the Code’s principles is that the
Board should present a fair, balanced
and understandable assessment of the
Company’s position and prospects
through its financial reporting. We have
always sought to ensure our financial
and other external reporting is fair,
balanced and understandable. The
Committee has kept this principle at the
forefront of its thought process as it
reviewed all the Company’s financial
reports in advance of publication and is
satisfied that they provide a fair,
balanced and understandable
assessment of the Company’s position
and prospects.
ANGUS COCKBURN
Chair, Audit Committee
AUDIT COMMITTEE REPORT
Members of the
Audit Committee are:
Angus Cockburn (chair)
Jill Easterbrook
Tanya Fratto
Renata Ribeiro
Lucinda Riches
Lindsley Ruth
Details of meeting attendance are
provided on page 94. The Audit
Committee’s terms of reference are
available on the Group’s website.
Ashtead Group plc Annual Report & Accounts 2023
97
DIRECTORS’ REPORT
Role of the Audit Committee
The Audit Committee assists the Board in
its oversight and monitoring of financial
reporting, risk management and internal
controls.
The principal responsibilities of the
Committee are to:
− monitor the integrity of the quarterly
and annual results, including a review of
the significant financial reporting
judgements contained therein;
− establish and oversee the Company’s
relationship with the external auditor,
including the external audit process,
their audit and non-audit fees and
independence and make
recommendations to the Board on the
appointment of the external auditor;
− consider the Company’s assessment of
emerging and principal risks, including
understanding and monitoring the way
in which these are being managed;
− review and assess the effectiveness of
the Company’s internal financial
controls and internal control and risk
management systems;
− oversee the nature, scope and
effectiveness of the internal audit work
undertaken; and
− monitor the Company’s policies and
procedures for handling allegations
from whistle-blowers.
The Committee reports to the Board on its
activities and minutes of meetings are
available to the Board.
Composition of the Audit
Committee
The members of the Committee, each of
whom is independent, provide the wide
range of financial and commercial
experience needed for the Committee to
undertake its duties and each member
brings an appropriate mix of senior
financial and commercial experience,
combined with a thorough understanding
of the Group’s business. As chair of the
Committee, Angus Cockburn has recent
and relevant financial experience, having
held a number of senior international
finance roles. Details of the experience of
each member of the Committee is
provided on pages 88 and 89.
The company secretary is secretary to the
Committee. Paul Walker, Brendan Horgan,
Michael Pratt, the Group’s director of
group finance, and the Group’s head of
internal audit and risk officer attend
meetings by invitation. In addition, the
Group’s external audit partner attends the
Committee’s meetings.
Main activities of the Audit
Committee during the year
The Committee met on five occasions
during the year. Meetings are scheduled to
coincide with our financial reporting cycle,
with four regular meetings scheduled
prior to our quarterly, half-year and
annual results announcements and the
fifth meeting scheduled outside this
timetable to enable a formal annual review
of the Group’s risk register and the work
undertaken by the Board throughout the
year in reviewing these risks.
At each meeting, the Committee receives
papers from management which
comment on the principal balances in the
financial statements and discusses any
significant judgements and matters of a
financial reporting nature arising since the
last meeting. In the current year, these
have included consideration of:
− the application of routine period-end
accounting policies and procedures; and
− the going concern and viability statement
to ensure that they are appropriate, are
based upon suitable assumptions and
consider the risks to which the Group
isexposed appropriately.
The Committee typically receives reports
from the external auditor at three of the
meetings. The first, in December, contains
the results of the external auditor’s review
of our half-year results. The half-year
review also informs the external auditor’s
planning for the annual audit. Their full
audit plan and proposed audit fee is
presented to the February/March meeting
of the Committee. The external auditor’s
final report of the year is presented at the
June committee meeting when we review
the draft Annual Report. The external
auditor’s report contains the findings from
their audit work, including comments on
the draft Annual Report. The Committee is
responsible for the Group’s relationship
with the external auditors, including
assessing the audit plan, setting the audit
fee, monitoring independence and
reviewing effectiveness.
The effectiveness of the Group’s financial
controls and assurance programme has
been a continued area of focus in the
current year in anticipation of any
requirements introduced following the
BEIS consultation. Historically, the Group
has outsourced internal audit activities.
Following a review of these
arrangements in 2021/22, the Group
appointed an in-house head of internal
audit who joined the Group in September
2022. In addition to the existing
programme of assurance around
financial controls, a key priority for the
head of internal audit is the development
of an operating model for internal audit,
based on a broader risk and assurance
map for the business, balanced between
internal and outsourced resources.
Further details of the activities of the
Audit Committee during the year are set
out on the next page.
Audit Committee report continued
Ashtead Group plc Annual Report & Accounts 2023
98
Integrity of financial reporting
We reviewed the integrity of the quarterly and annual financial statements of the Company. This included the review and discussion of
papers prepared by management and took account of the views of the external auditors. The key areas reviewed in the current year are
set out below.
Key area Response Audit Committee conclusion
Carrying value of rentalfleet
The carrying value of the
Group’s rental fleet of $9,649m
(2022: $7,814m) makes up 52%
(2022: 51%) of the Group’s gross
assets. Both the useful lives
and residual values assigned
requires the exercise of
judgement by management.
Management undertakes an annual review of the
appropriateness of the useful lives and residual values
assigned to property, plant and equipment and assesses
whether they continue to be appropriate and whether there
are any indications of impairment. Among other things this
review considers the level of gains on disposal and age of
assets at the date of disposal along with the level of second-
hand values, while taking into account the impact of the
economic cycle.
The Committee reviewed
management’s assessment of the
carrying value of rental assets and
judgements associated with the
application of useful lives and residual
values. The Committee took into
account the findings of the external
auditor and is satisfied that the
judgements taken by management
are appropriate and that these are
consistent with prior years.
Going concern and financing
activities
The Group requires ongoing
access to its financing
arrangements to enable it to
benefit from growth
opportunities.
Management reviewed the appropriateness of the going
concern assumption in preparing the financial statements.
The Committee reviewed a paper prepared by management
which considered the Group’s internal budgets and forecasts
of future performance, available financing facilities and
facility headroom. In addition, we reviewed scenario planning
in assessing the Group’s viability over the medium-term.
Taking account of reasonably possible changes in trading
performance, used equipment values and other factors that
might affect availability, the Group expects to maintain
significant headroom under its borrowing facilities for the
forthcoming year.
The Committee reviewed the
assessment of the going concern
assumption and long-term viability,
including understanding the scenario
analysis performed in relation to the
potential impact of any economic
downturn. The Committee is satisfied
that the going concern basis of
preparation continues to be appropriate
in preparing the financial statements.
Goodwill impairment review
The Group’s strategy includes
growth through bolt-on M&A
activity, as a result of which,
goodwill arises. The carrying
value of goodwill at 30 April
2023 is $2,866m (2022:
$2,300m).
The Group undertakes a formal goodwill impairment review
as at 30 April each year. This is based on the latest approved
budget and three-year plans for the US, UK and Canadian
businesses. The Group classifies certain specialty
businesses as separate cash-generating units (‘CGUs’),
due to them generating separately identifiable cash flows.
Following the review undertaken, and
in light of the Group’s current and
forecast performance, the Committee
is satisfied that the CGUs are
appropriate to the Group and that
there is no impairment of the carrying
value of goodwill in the CGUs of the
US, UK or Canada.
Further details are provided in Note 15
to the financial statements.
In addition, the Committee also
considered the following matters during
the course of the year:
− the use of alternative performance
measures, ensuring these are fair,
balanced and understandable;
− the effectiveness of the Group’s
internalfinancial controls, as detailed
further on page 101;
− the work of the Group’s second-line
assurance team, which includes
monitoring of the Group’s control
self-certification process, management
of financial control documentation and,
in the current year, work to refresh the
documentation of our technology
processes and controls, as they relate
to financial reporting;
− the internal audit work and reviewing
the Group’s approach to internal
audit,further details of which are
setout on page 101;
− the approach taken to ensure material
climate-related matters are considered
and the disclosure made in accordance
with the requirements of the Task Force
on Climate-related Financial
Disclosures; and
− the Group’s tax strategy and received an
update on tax compliance matters.
Ashtead Group plc Annual Report & Accounts 2023
99
DIRECTORS’ REPORT
External audit
External audit effectiveness
The Committee conducted an assessment
of the effectiveness of the audit of the
2022/23 financial statements, based on its
own experience and drawing on input from
senior corporate management and senior
finance management across the Group.
The review was based on questionnaires
completed by the members of the
Committee and senior management. The
questionnaires focused on the quality and
experience of the team assigned to the
audit, the robustness of the audit process,
the quality of delivery and communication
and governance and independence of the
audit firm. This review also considers
the role of management in the audit
process and therefore enables the
Audit Committee to form a view of
management’s role in ensuring the
effectiveness of the external audit.
The questionnaires used enable the Audit
Committee to gain a thorough insight into
the audit process with sufficient detail to
establish an informed view of the audit
process across the business and as such
form a view as to the effectiveness of the
external audit.
The feedback received was positive and
recognised an appropriate focus on the
principal risks. Furthermore, the audit
work continued to be completed in a
rigorous and sceptical manner. At its
meeting in June, the Committee discussed
the results from the questionnaires and
the audit process more generally.
Asaresult of these considerations,
theCommittee is satisfied that the audit
process and strategy for the audit of
the2022/23 financial statements
waseffective.
External auditor
Deloitte was appointed external auditor in
2004. In accordance with the provisions of
The Strategy Audit Services for Large
Companies Market Investigation
(Mandatory Use of Competitive Tender
Process and Audit Committee
Responsibilities) Order 2014, we are
required to rotate auditor following
the 2023 audit. In anticipation of this
requirement, we undertook a tender for
the 2023/24 audit during 2021/22 to
ensure that sufficient time was available
to transition any non-audit services ahead
of the change in auditor. As a result
of the audit tender, the Committee
recommended to the Board, and the
Board agreed, to appoint
PricewaterhouseCoopers LLP (‘PwC’)
asthe Group’s external auditor for the
2023/24 audit, subject to shareholder
approval at the 2023 AGM.
Non-audit services and external
auditor independence
The Committee monitors the nature and
extent of non-audit services on a regular
basis to ensure the provision of non-audit
services is within the Group’s policy and
does not impair the auditor’s objectivity or
independence. While the use of the
Group’s auditor for non-audit services is
not prohibited, the Group typically elects
to use an alternative advisor but accepts
that certain work of a non-audit nature is
best undertaken by the external auditor.
We were again satisfied that non-audit
services were in line with our policy and
did not detract from the objectivity and
independence of the external auditor.
The non-audit fees paid to the Company’s
auditor, Deloitte LLP, for the year relate
principally to their review of the
Company’s interim results and the issue of
comfort letters provided in connection
with the Group’s financings, work typically
undertaken by the auditor. Details of the
fees payable to the external auditor are
given in Note 4 to the financial statements.
Non-audit fees represented 18% of the
audit fee in the year.
Fair, balanced and understandable
As part of its responsibilities, the Board
has requested that the Audit
Committee assess whether, in its
opinion, the Annual Report & Accounts
2023, taken as a whole, are a fair,
balanced and understandable
presentation of the Group’s position
andprospects.
In making its assessment, the Audit
Committee considered a number of
factors, including:
− whether the narrative reporting on
the performance of the business is
consistent with the financial
statements presented;
− whether the information presented
is complete with no information
omitted that should have been
included to enable a user to
understand the business, its
performance and its prospects;
− considering the KPIs utilised by the
Group, including alternative
performance measures, to ensure
that these best reflect its strategic
priorities and fairly present
business performance;
− assessing areas of judgement
which were considered by the
Audit Committee during the year
and whether these are highlighted
appropriately within the
AnnualReport;
− the outcome of meetings held
during the year with Deloitte as
external auditor and the head of
internal audit to discuss qualitative
accounting judgements and overall
controls. The meetings cover
suitability, consistency of
application in year and across
periods and accounting practices
ofindustry peers; and
− assessing whether the report is
clear and understandable, with
appropriate narrative given to
present the whole story.
Following its review, the Committee
concluded that the Annual Report &
Accounts 2023 are representative of the
Group and its performance during the
year and that the Annual Report &
Accounts 2023 present a fair, balanced
and understandable overview.
Audit Committee report continued
Ashtead Group plc Annual Report & Accounts 2023
100
Internal audit
The Committee is responsible for the
Group’s overall assurance framework,
including ensuring the nature and scope of
internal audit activities are appropriate for
the Group and that internal audit findings
are considered and actioned appropriately.
Following a review of internal audit
activities in 2021/22, the Group appointed
an in-house head of internal audit and risk
officer during 2022/23, working alongside
outsourced internal audit resource and
other assurance providers. This year,
internal audit work has focused on the
design, implementation and operating
effectiveness of core financial and cyber
security controls. The scope of the work
undertaken by our internal audit function
is designed to provide coverage of our key
controls, working alongside the Group’s
management assurance processes and
the work of the external auditor. This
workfound that an effective control
environment was in operation and
identified a small number of control
enhancement opportunities.
Internal audit prepares detailed reports
which are discussed with management
and against which detailed action plans
are agreed. Key matters are highlighted
to the Audit Committee through reports
presented at Audit Committee meetings
and the Audit Committee receives regular
updates as to the status of open
recommendations. In 2023/24, the Group’s
head of internal audit will undertake a
review of the Group’s overall risk
management process and assurance
map, and develop further the Group’s
in-house internal audit function to work
alongside outsourced resource.
In addition, the internal operational audit
teams in the businesses undertake
operational audits across the store
network using a risk-based methodology.
Each year the Committee agrees the
scope of work and the coverage in the
audit plan at the start of the year and
receive formal reports on the results of
the work at the half year and full year.
During the year 638 audits were
completed, which is consistent with our
goal for each of our stores to receive an
audit visit at least once every two years.
The audits are scored and action plans
agreed with store management to remedy
identified weaknesses. This continual
process of reinforcement is key to the
store level control environment.
Internal audit effectiveness
The Audit Committee conducts an annual
assessment of the scope of internal audit
and the effectiveness of the internal
auditor’s work. The review is based on the
Committee’s engagement with the internal
auditor and feedback from management.
As a result of the review of internal audit
effectiveness, the Committee is satisfied
that the scope of work and its
effectiveness is appropriate.
Financial control and
risk management
The Company’s objective is to maintain a
strong control environment which
minimises the financial risk faced by the
business. It is the Committee’s
responsibility to review and assess the
effectiveness of the Company’s internal
financial controls and risk management
processes.
The Group’s control and monitoring
procedures include:
− the maintenance and production
ofaccurate and timely financial
management information, including
amonthly profit and loss account and
selected balance sheet data for
eachstore;
− the control of key financial risks through
clearly laid down authority levels and
proper segregation of accounting
dutiesat the Group’s accounting
support centres;
− the preparation of a monthly financial
report to the Board;
− the preparation of an annual budget and
periodic update forecasts which are
reviewed by the executive directors and
then by the Board;
− a programme of rental equipment
inventories and full inventory counts
conducted at each store by equipment
type and independently checked on a
sample basis by our operational
auditors and external auditor;
− comprehensive financial assurance
activities including routine ‘second-
line’controls testing to monitor
controlactivities;
− detailed internal audits at the Group’s
major accounting centres undertaken
by internal audit specialists;
− review of the effectiveness of
internalaudit;
− comprehensive audits at each store
generally carried out at least every
twoyears by internal operational audit.
A summary of this work is provided
semi-annually to the Audit
Committee;and
− whistle-blowing procedures by which
staff may, in confidence, raise concerns
about possible improprieties or
breaches of company policy or
procedure.
The Committee receives regular reports
from the head of internal audit, internal
operational audit and the Group Risk
Committee. The Group’s risk management
processes are an area of focus as they
adapt to reflect changes to our risk profile
as a result of our significant growth, both
organic and through bolt-on acquisitions.
Viability statement
The Committee discussed management’s
approach to the viability statement and
reviewed the work undertaken by
management and reviewed a paper
summarising their conclusions and
proposed statement. The statement was
agreed at the June meeting and is
included on page 45.
Ashtead Group plc Annual Report & Accounts 2023
101
DIRECTORS’ REPORT
NOMINATION COMMITTEE REPORT
Role of the Nomination
Committee
The principal duties of the Committee
are making recommendations to the
Board on:
− the Board’s structure, size,
composition and balance; and
− the appointment, reappointment,
retirement or continuation of
anydirector.
The chair of the Board chairs the
Nomination Committee but is not
permitted to participate in the
appointment of their successor.
Main activities of the
Nomination Committee
during the year
Reappointment of directors
The Committee unanimously
recommends the re-election of each of
the directors at the 2023 AGM. In
making this recommendation, the
Committee evaluated each director in
terms of their performance,
commitment to the role, and capacity to
discharge their responsibilities
effectively, given their other external
time commitments and responsibilities.
Board composition and diversity
Our objective is to have a broad range
ofskills, background and experience
within the Board as we believe that this
ensures the Board is best placed to
serve the Group. While we will continue
to ensure that we appoint the best
people for the relevant roles, we
recognise the benefits of diversity in
ensuring a mix of views and providing
abroad perspective.
The Group’s gender diversity statistics
are set out within our Responsible
business report including details of
itsapproach to diversity and equal
opportunities across the Group. At
board level, four out of nine of our
Board roles are held by women but we
note that diversity extends beyond the
measurable statistics of gender and
ethnicity. As such, while we do not set
any particular targets, we continue to
take diversity in its wider context into
account when considering any
particular appointment.
Succession planning
Succession planning for the Board and
senior management continues to be an
area of focus for the Board, ensuring
that appropriate succession plans are
reviewed and updated on a regular
basis and that board rotation is
managed so that it is distributed across
a number of years. The Board,
facilitated by the chief executive,
undertook a detailed review of
succession plans for the business at its
meeting in April this year. The tenure of
non-executive directors is illustrated in
the graph below:
Tenure
1 4 2
1–3 years 6–9 years
3–6 years
Board appointment process
When considering the recruitment of a
new director, the Committee considers
the required balance of skills,
knowledge, experience and diversity to
ensure that any new appointment adds
to the overall board composition. The
Committee utilises the services of
independent external advisors to
facilitate the search based on the
criteria determined by the Committee
for the role.
PAUL WALKER
Chair, Nomination Committee
Members of the
Nomination Committee are:
Paul Walker (chair)
Angus Cockburn
Jill Easterbrook
Tanya Fratto
Renata Ribeiro
Lucinda Riches
Lindsley Ruth
Details of meeting attendance
areprovided on page 94. The
Nomination Committee’s terms
ofreference are available on the
Group’s website.
Ashtead Group plc Annual Report & Accounts 2023
102
REMUNERATION REPORT
Dear Shareholder
I am pleased to present the
Remuneration report for 2022/23
following another year of strong
performance for the Group.
Remuneration policy
At the 2022 AGM, 67.3% of the total
votes received were in favour of the
Remuneration report. Following the
AGM, the Group continued to engage
with shareholders and targeted
specifically those institutional
shareholders it identified as voting
against the resolution. Based on this
engagement and additional
conversations with proxy voting
advisors it is clear that the main
concerns continued to relate to changes
made to the Remuneration policy
implemented in 2021.
Having listened to feedback from
shareholders the Remuneration
Committee will be recommending to
the Board that the remuneration policy
to be put to shareholders at the AGM in
2024 does not contain the option of
granting a one-off award to executive
directors. In addition, the Committee
will review the performance measures
relating to its Long-Term Incentive Plan
(LTIP) awards and intends to include an
ESG target and review the level of
vesting at threshold performance.
However the remuneration gap
between the Group and its US-listed
peers is significant and the Committee
intends to address this issue under its
next policy.
Notwithstanding the Group’s London
listing, Ashtead is essentially a US
business operationally with over 90%
ofits revenue and over 95% of its
operating profits being generated in
North America and these proportions
are likely only to increase for the
foreseeable future. Shareholders
haveenjoyed significant benefits by
being exposed to the North American
markets but the Group’s ability to
attract and retain the calibre of senior
executives, who are citizens of and
reside in the US, required to achieve
theBoard’s ambitions for the Group
isbeing and will continue to be
hamperedseverely by the remuneration
environment in the UK. The Committee
will need to address this as a matter
ofurgency with its next
remunerationpolicy.
On behalf of the Remuneration
Committee both the Group’s chair
andIwill be commencing an extensive
consultation with shareholders to
enable us to achieve a policy that
isacceptable to the majority of the
Group’s stakeholders and will be
afundamental tool in driving the
businessto even greater success.
Company performance and
remuneration in 2022/23
On behalf of the Committee, I wish to
thank our entire workforce for their
contribution to Ashtead’s continued
success, further details of which are
setout on pages 28 to 35 of the Annual
Report. The Group delivered record
results in 2022/23 as we executed
against our strategic plan, Sunbelt 3.0,
while remaining focused on our core
value of ensuring our people remain at
the heart of what we do.
Deferred bonus plan
The chief executive and chief financial
officer participate in the deferred bonus
plan where performance is measured
by reference to Group adjusted pre-tax
profit and free cash flow generation.
The bonus targets for 2022/23, which
were achieved in full, are set out on
page 113.
Members of the
Remuneration Committee are:
Lucinda Riches (chair)
Angus Cockburn
Jill Easterbrook
Renata Ribeiro
Tanya Fratto
Lindsley Ruth
Details of meeting attendance
areprovided on page 94. The
Remuneration Committee’s terms
ofreference are available on the
Group’s website.
Ashtead Group plc Annual Report & Accounts 2023
103
DIRECTORS’ REPORT
2020 Performance Share Plan
awardvesting
The long-term performance of the
Company is reflected in the full vesting of
the 2020 Performance Share Plan (‘PSP’)
award. The award will vest on the
completion of the three-year vesting
period in June 2023. The performance
conditions and targets, weighting, actual
performance and associated level of
vesting are set out on page 114.
The Committee reviewed the outcomes
under the 2023 deferred bonus plan and
2020 PSP awards, in the context of the
underlying performance of the Group and
the stakeholder experience. It concluded
that no discretion to adjust the formulaic
outcome was required.
Remuneration for 2023/24
Salary increases for executive
directors and the rest of the
workforce
To ensure a consistent and collaborative
approach is taken to remuneration across
the entire organisation the Committee
monitors continuously the pay and
benefits across the workforce as a whole.
Furthermore, the Committee also reviews
the proposed salary increases, bonuses
and LTIP awards for the wider workforce
to ensure a consistent reward structure.
Each year the Committee reviews the
remuneration of the Group’s executive
directors and has determined to increase
the base salaries for its chief executive
and chief financial officer by 4% with effect
from 1 May 2023, compared with average
salary increases of c. 5% given to the
general workforce. The Committee
considered this level of salary increase
toreflect appropriately their continued
strong performance and valued
contribution to the ongoing success
oftheGroup.
2024 deferred bonus plan award
The executive directors participate in the
deferred bonus plan. The Committee sets
targets annually with reference to Group
adjusted profit before tax and free cash
flow. No changes are proposed to the
reward opportunities under the deferred
bonus plan for the financial year ending
30April 2024.
LTIP award for 2023
The LTIP awards for 2023 for the executive
directors are unchanged from last year
and will be as follows:
− chief executive: 350% of base salary;
and
− chief financial officer: 225% of base
salary.
We will continue setting stretching
through-the-cycle targets to reward
sustainable, long-term growth as
assessed across a balance of different
metrics (relative TSR, EPS, RoI and
leverage). The Committee continues to
believe that through-the-cycle targets
remain the most appropriate measures
for a cyclical business and will retain the
existing targets for its 2023 award.
Conclusion
The key decisions of the Committee
relating to remuneration for the current
year are set out below:
− the executive directors will receive
100% of their deferred bonus plan
award for 2022/23 performance;
− the 2020 PSP award will vest in full in
June 2023;
− the Group chief executive and Group
chief financial officer’s base salaries
will increase by 4% from 1 May 2023;
and
− the LTIP award opportunity for 2023 will
be 350% of base salary for the chief
executive and 225% of base salary for
the chief financial officer. Performance
conditions in respect of these awards
appear on page 114.
At this year’s AGM there will be a single
advisory resolution in respect of the
Directors’ remuneration report, details of
which are set out in the Notice of Meeting.
I believe the decisions made by the
Committee both reflect and build on the
constructive shareholder dialogue which
Iintend to continue going forward. I hope
you will agree and will therefore be able
tovote in favour of this year’s
Remuneration report.
LUCINDA RICHES
Chair of the Remuneration Committee
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
104
Introduction
This report has been prepared in
accordance with the Listing Rules of the
Financial Conduct Authority, the relevant
sections of the Companies Act 2006 and
The Large and Medium-sized Companies
and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (‘the
Regulations’). It explains how the Board
has applied the Principles of Good
Governance relating to directors’
remuneration, as set out in the UK
Corporate Governance Code. The
Regulations require the auditor to report
to the Company’s members on elements
of the Directors’ remuneration report and
to state whether, in their opinion, that part
of the report has been properly prepared
in accordance with the Companies Act
2006. The audited information is included
on pages 112 to 117.
An ordinary resolution concerning
theDirectors’ remuneration report
(excluding the Remuneration policy)
willbe put to shareholders at the AGM
on6 September 2023.
Remuneration policy
During the 2022/23 financial year, the
Committee kept under review its approach
to remuneration against Provision 40 of
the Code, and concluded that the
Remuneration policy and practices
appropriately address the six pillars of:
clarity; simplicity; risk, predictability;
proportionality; and alignment to culture:
− clarity: the Remuneration policy is
transparent and its implementation is
disclosed in a straightforward and
consistent manner to both shareholders
and employees using the Group’s
annual report and via a range of
employee engagement mechanisms,
details of which are provided within
thisreport;
− simplicity: the Group adopts
remuneration structures for executive
directors which are not complex and
which are market typical. Executive
director remuneration comprises a
base salary, benefit and pension
arrangements which are in line with the
wider workforce, and an annual bonus
and long-term incentive awards which
are aligned with the Group’s financial
performance and strategic plans.
Details of the operation of this
remuneration structure is provided
within this report;
− risk: the Remuneration policy has been
designed to discourage inappropriate
risk-taking with an appropriate mix of
fixed and variable remuneration.
Variable elements are focused on the
long-term success of the Group, with
awards under the deferred bonus plan
and long-term incentive plans subject to
malus and clawback provisions.
Performance conditions are reviewed
regularly to ensure they remain
sufficiently stretching to ensure poor
performance is not rewarded, but
without being so stretching as to
encourage and incentivise risk-taking;
− predictability: the illustration on page
109 provides detail of the potential
future reward based on different
performance scenarios under the
application of the Remuneration policy
for 2023/24. Incentive arrangements
are applied consistently over time
andsubject to clearly defined pay-out
schedules, deferral requirements
andshareholding policies;
− proportionality: the link between each
element of the Remuneration policy and
its strategy is detailed in the policy table
below, with a range of short and
long-term components. Furthermore,
the Committee retains appropriate
discretion to adjust formulaic bonus and
long-term incentive outcomes, where
these would otherwise result in
outcomes that are not aligned with
stakeholders’ experience; and
− alignment to culture: remuneration
practices are aligned with the Group’s
purpose, values and strategy. This was
reinforced with the introduction of ESG
measures into the Group’s
remuneration performance measures
for the Strategic Plan Award.
Shareholders approved the Group’s
Remuneration policy at the 2021 AGM and
the policy has operated as set out on the
next page. Anew remuneration policy will
be put to shareholders at the 2024 AGM.
Major shareholders will be consulted in
advance on proposed changes.
Ashtead Group plc Annual Report & Accounts 2023
105
DIRECTORS’ REPORT
The Group’s remuneration policy
Base salary
Link to strategy
The purpose of the base
salary is to attract and
retain directors of the high
calibre needed to deliver
the long-term success of
the Group without paying
more than is necessary to
fill the role.
Operation
Ordinarily, base salary is set annually
and is payable on a monthly basis.
An executive director’s base salary is
determined by the Committee. In
deciding appropriate levels, the
Committee considers the experience
and performance of individuals and
relationships across the Board and
seeks to be competitive using
information drawn from both internal
and external sources and taking account
of pay and conditions elsewhere in
theCompany.
The comparator group currently used to
inform decisions on base salary is
principally the FTSE organisations of
similar size, geographic footprint and
index positioning of the Company. The
Committee intends to review the
comparator group each year, to ensure
this remains appropriate, and any
changes would be disclosed to
shareholders in setting out the
operation of the policy for the
subsequent year.
Individuals who are recruited or
promoted to the Board may, on
occasion, have their salaries set below
the policy level until they become
established in their role. In such cases
subsequent increases in salary may be
higher than the average increase until
the target positioning is achieved.
Maximum potential
value
The policy for salary is
around the median
level for comparable
positions in relation to
the comparator
groups.
Increases will normally
be in line with both the
market and typical
increases for other
employees across
theGroup.
Details of the executive
directors’ salaries, and
any increases awarded
are set out in the
Remuneration report.
Performance conditions
andassessment
N/A
Benefits
Link to strategy
To provide competitive
employment benefits.
Operation
The executive directors’ benefits will
generally include medical insurance, life
cover, car allowance and travel and
accommodation allowances.
The type and level of benefits provided is
reviewed periodically to ensure they
remain market competitive.
Maximum potential
value
The maximum will be
set at the cost of
providing the listed
benefits.
Performance conditions
and assessment
N/A
Pension
Link to strategy
To provide a competitive
retirement benefit.
Operation
The Company makes pension
contributions (or pays a salary
supplement in lieu of pension
contributions) equal to the average
available for the workforce in the
relevant geography.
Maximum potential
value
The maximum pension
contribution for all
directors is aligned
with the average
employee contribution
in the respective
geographies.
Performance conditions
and assessment
N/A
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
106
Deferred Bonus Plan (‘DBP’)
Link to strategy
The purpose of the DBP is
to incentivise executives to
deliver stretching annual
financial performance
while aligning short-term
and long-term reward
through compulsory
deferral of a proportion
into share equivalents. This
promotes the alignment of
executive and shareholder
interests.
Operation
The DBP runs for consecutive three-
year periods with a significant proportion
of any earned bonus being compulsorily
deferred into share equivalents. Based
on achievement of annual performance
targets, participants receive two-thirds
of the combined total of their earned
bonus for the current year and the value
of any share equivalent awards brought
forward from the previous year at the
then share price. The other one-third is
compulsorily deferred into a new award
of share equivalents evaluated at the
then share price.
Deferred share equivalents are subject
to 50% forfeiture for each subsequent
year of the plan period where
performance falls below the forfeiture
threshold set by the Committee.
At the expiration of each three-year
period, participants will, subject to
attainment of the performance
conditions for that year, receive in
cashtheir bonus for that year plus
anybrought forward deferral at its
thenvalue.
Dividend equivalents may be provided on
deferred share equivalents.
Maximum potential
value
The maximum annual
bonus opportunity
under the DBP is 225%
of base salary.
Target performance
earns 50% of the
maximum bonus
opportunity.
Performance conditions
and assessment
The current DBP performance
conditions are Group adjusted
pre-tax profit and free cash flow.
Stretching financial targets are set
by the Committee at the start of
each financial year.
The Company operates in a rapidly
changing sector and therefore the
Committee may change the balance
of the measures, or use different
measures for subsequent financial
years, as appropriate.
The Committee has the discretion
toadjust measures, targets or
weightings for any exceptional events
that may occur during the year.
The Remuneration Committee is of
the opinion that given the commercial
sensitivity arising in relation to the
detailed financial targets used for the
DBP, disclosing precise targets for
the bonus plan in advance would not
be in shareholder interests. Actual
targets, performance achieved and
awards made will be published at the
end of the performance periods so
shareholders can assess fully the
basis for any pay-outs under the plan.
Performance Share Plan (‘PSP’)/Long-Term Incentive Plan (‘LTIP’)
Link to strategy
The purpose is to attract,
retain and incentivise
executives to optimise
business performance
through the economic
cycle and hence, build a
stronger underlying
business with sustainable
long-term shareholder
value creation.
This is an inherently
cyclical business with high
capital requirements. The
performance conditions
have been chosen to
ensure that there is an
appropriate dynamic
tension between growing
earnings, delivering strong
RoI, whilst maintaining
leverage discipline.
Operation
Awards are granted annually and
vesting is dependent on the achievement
of performance conditions.
Performance is measured over a
three-year period.
The operation of the plan is reviewed
annually to ensure that grant levels,
performance criteria and other features
remain appropriate to the Company’s
current circumstances.
Dividend equivalents may be provided
on vested shares.
Vested shares (net of taxes) are required
to be held for a period of at least two
years post-vesting.
Maximum potential
value
The maximum annual
award which can be
made under the LTIP
scheme has a market
value at the grant date
of 350% of base salary.
At target performance
32.5% of the award
vests.
In 2023/24 the award
for Brendan Horgan
will be 350% of base
salary and 225% for
Michael Pratt.
Performance conditions
and assessment
Awards are subject to continued
employment and achievement of a
range of balanced and holistic
performance conditions that are
maintained across the cycle. The
current performance criteria are
set out on page 114.
Ashtead Group plc Annual Report & Accounts 2023
107
DIRECTORS’ REPORT
Strategic Plan Award
Link to strategy
The Strategic Plan Award
is a standalone
performance share award
linked directly to those
objectives underpinning
the Sunbelt 3.0 strategy.
The performance
conditions are aligned to
the stretching financial and
operational aspirations of
Sunbelt 3.0 and linked to
measures that ensure
growth is delivered in a
sustainable and
responsible fashion.
Operation
The Strategic Plan Award is a one-off
award granted at the beginning of the
Sunbelt 3.0 strategic period. Vesting is
dependent on the achievement of
performance conditions measured over
the three-year period to 30 April 2024.
Dividend equivalents may be provided
on vested shares.
Vested shares (net of taxes) are required
to be held for a period of at least two
years post-vesting.
Maximum potential
value
The maximum award
which can be made
under the Strategic
Plan Award has a
market value of 350%
of base salary.
At threshold
performance 25% of
the award vests.
Performance conditions
and assessment
Awards are subject to continued
employment and achievement of a
range of financial and operational
performance conditions linked to
the five strategic components of the
Sunbelt 3.0 plan, details of which
are set out on page 115.
Shareholding policy
Link to strategy
Ensures a long-term
locked-in alignment
between the executive
directors and
shareholders.
Operation
The Committee requires the executive
directors to build and maintain a
material shareholding in the Company
over a reasonable time frame, which
would normally be five years.
The Committee has discretion to
increase the shareholding requirement.
Maximum potential
value
Minimum shareholding
requirement:
− Current chief
executive: 500% of
salary
− Other executive
directors: 300% of
salary
Performance conditions
and assessment
N/A
Post-cessation shareholding requirement
Link to strategy
Strengthens the alignment
between the long-term
interests of executive
directors and
shareholders.
Operation
The Committee requires the executive
directors to maintain the minimum
shareholding requirement for two years
post-cessation.
Maximum potential
value
Minimum shareholding
requirement:
− Chief executive:
300% of salary
− Other executive
directors: 200% of
salary
Performance conditions
and assessment
N/A
Notes to the policy table:
1.
In relation to the PSP/LTIP:
a. Total shareholder return measures the relative return from Ashtead against an appropriate comparator group, providing alignment with shareholders’ interests.
b. Earnings per share is also a key measure ensuring sustainable profit generation over the longer term and is a measure which is aligned with shareholders’ interests.
c. Return on investment is a key internal measure to ensure the effective use of capital in the business which is cyclical and with high capital requirements.
d. The use of leverage alongside the other performance measures ensures there is an appropriate dynamic tension and balance, maintaining leverage discipline in a
capital-intensive business. The leverage target is equal to or less than 2 times (2.4 times post IFRS 16), averaged across the three-year period.
2. In relation to both the DBP and the PSP/LTIP, malus and clawback provisions exist which enable the Committee to reduce or eliminate the number of shares, notional
shares or unvested shares held or reduce the amount of any money payable or potentially payable and/or to require the transfer to the Company of all or some of the
shares acquired or to pay to the Company an amount equal to all or part of any benefit or value derived from, or attributable to, the plans in case of material misstatement
of accounts or action or conduct of an award holder or award holders which in the reasonable opinion of the Board, amounts to fraud or gross misconduct.
3. The Committee will operate the Company’s incentive plans according to their respective rules and consistent with normal market practice, the Listing Rules and HMRC
rules where relevant, including flexibility in a number of regards. These include making awards and setting performance criteria and targets for new cycles each year,
dealing with leavers, and adjustments to awards and performance criteria following acquisitions, disposals, changes in share capital and to take account of the impact of
other merger and acquisition activity. The Committee retains discretion, in exceptional circumstances, under the rules of the DBP and long-term incentive plans (PSP and
LTIP) to adjust performance conditions to ensure that the awards fulfil their original purposes. All assessments of performance are ultimately subject to the Committee’s
judgement. Any discretion exercised, and the rationale for doing so, will be disclosed in the Directors’ remuneration report.
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
108
Remuneration policy on new hires
When hiring a new executive director, the Committee will seek to align the remuneration package with the Remuneration policy
summarised above. In addition, where the executive has to relocate, the level of relocation package will be assessed on a case-by-case
basis. Although it is not the Committee’s policy to buy-out former incentive arrangements as a matter of course, it will consider
compensating an incoming executive with like-kind incentive arrangements for foregone incentives with their previous employer,
taking into account the length of the period they were held and an assessment of the likely vesting value. The Committee will ensure
that such arrangements are in the best interests of both the Company and the shareholders without paying more than is necessary.
Total remuneration opportunity
Our remuneration arrangements are designed so that a significant proportion of pay is dependent on the delivery of short and
long-term objectives designed to create shareholder value.
The graphs below illustrate the potential future reward opportunity for each of the executive directors in 2023/24, and the base salary
at 1 May 2023.
Chief executive – Brendan Horgan ($’000) Chief financial officer – Michael Pratt (£’000)
10,000
8,0006,0004,0002,0000
32%
96%
15%
12%
4%
1%
1%
1%
36%31%
31% 53%
24% 63%
Target
Minimum
Maximum
Share price
growth
4,000
3,5003,0002,5002,0001,5001,0005000
Target
Minimum
Maximum
Share price
growth
39%
93%
21%
17%
7%
3%
1%
1%
29%
31%
29%
47%
25% 57%
Salary Pension and benefits DBP PSP
In illustrating potential reward opportunities, the following assumptions have been made:
Base salary, benefits and pension DBP LTIP
Minimum
Base salary, benefits and pension or
cash in lieu of pension
No DBP payment payable No vesting
Target/threshold As above
On target DBP payment
(50% of maximum)
32.5% vesting
Maximum As above Maximum DBP payment Full vesting
Share price growth As above Maximum DBP payment Full vesting with 50% share price growth
The impact of share price movements on the value of LTIPs has been excluded for the minimum, target and maximum scenario.
The impact of share price changes on the value of mandatory bonus deferrals into the DBP has been excluded from all scenarios.
Service contracts
The Company’s policy is that executive directors have rolling contracts terminable by either party giving the other 12 months’ notice,
which are available for inspection at the Company’s registered office. The service contracts for each of the executive directors all
contain non-compete provisions appropriate to their roles.
Ashtead Group plc Annual Report & Accounts 2023
109
DIRECTORS’ REPORT
Policy on payment for loss of office
Upon the termination of employment of any executive director, any compensation will be determined in accordance with the relevant
provisions of the director’s employment contract and the rules of any incentive scheme which are summarised below.
Base salary and benefits
Approach
In the event of termination by the Company, there will be no compensation for loss of
office due to misconduct or normal resignation.
In other circumstances, executive directors may be entitled to receive compensation
for loss of office which will be a maximum of 12 months’ salary.
Such payments will be equivalent to the monthly salary and benefits that the executive
would have received if still in employment with the Company. Executive directors will
beexpected to mitigate their loss within a 12-month period of their departure from
theCompany.
Application of Committee discretion
The Committee has discretion to make a lump
sum payment in lieu.
Pension
Approach
Pension contributions or payments in lieu of pension contribution will be made during
the notice period. No additional payments will be made in respect of pension
contributions for loss of office.
Application of Committee discretion
The Committee has discretion to make a lump
sum payment in lieu.
Deferred Bonus Plan
Approach
The treatment of the Deferred Bonus Plan is governed by the rules of the plan.
Cessation of employment
If a participant ceases to be employed by a Group company for any reason an award
that has not vested shall lapse unless the Committee in its absolute discretion
determines otherwise for ‘good leaver’ reasons (including, but not limited to, injury,
disability, ill health, retirement, redundancy or transfer of the business).
If the Committee determines that deferred awards held in a participant’s plan account
shall not lapse on cessation of employment, all deferred awards held in the
participant’s plan account shall vest immediately and the Committee shall determine:
(a) whether the measurement date for that plan year is brought forward to the date of
cessation or remains at the end of the plan year; and
(b) whether a reduction is applied to the payment to take account of the proportion of
the plan year elapsed and the contribution to the Group.
If the Committee determines that the measurement date is the date of cessation, the
Committee shall pro-rate the performance conditions to the date of cessation.
Application of Committee discretion
The Committee has the discretion to determine
that an executive director is a good leaver.
The Committee retains discretion to set the
measurement date for the purposes of
determining performance measurement and
whether to pro-rate the contribution for that
plan year. It should be noted that it is the
Committee’s policy only to apply such
discretions if the circumstances at the time
are, in its opinion, sufficiently exceptional, and
to provide a full explanation to shareholders
where discretion is exercised.
Change of control
On a change of control, all deferred awards held in a participant’s plan account shall
vest immediately and the Committee shall determine:
(a) that the measurement date is the date of the change of control; and
(b) whether a reduction is applied to the payment to take account of the proportion of
the plan year elapsed and the participant’s contribution to the Group.
The Committee shall pro-rate the performance conditions to the measurement date.
In the event of an internal reorganisation, the Committee may determine that awards
are replaced by equivalent awards.
The Committee retains discretion to pro-rate
the contribution for that plan year. It is the
Committee’s policy in normal circumstances to
pro-rate to time; however, in exceptional
circumstances where the nature of the
transaction produces exceptional value for
shareholders and provided the performance
targets are met, the Committee will consider
whether pro-rating is equitable.
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
110
PSP/LTIP (including Strategic Plan Award)
Approach
The treatment of awards is governed by the rules of the relevant plan.
Cessation of employment
If a participant ceases to be employed by a Group company for any reason an award
that has not vested shall lapse unless the Committee in its absolute discretion
determines otherwise for ‘good leaver’ reasons (including, but not limited to, injury,
disability, ill health, retirement, redundancy or transfer of the business).
Where the participant is a good leaver, and at the discretion of the Committee, awards
may continue until the normal time of vesting and with the performance target and any
other conditions considered at the time of vesting. If the participant’s awards vest, the
proportion of the awards which shall vest will be determined by the Committee in its
absolute discretion taking into account such factors as the Committee may consider
relevant including, but not limited to, the time the award has been held by the
participant and having regard to the performance target and any further condition
imposed under the rules of the relevant plan.
Alternatively, the Committee may decide that the award may vest on the date of
cessation taking into account such factors as the Committee may consider relevant
including, but not limited to, the time the award has been held by the participant and
having regard to the performance target and any further condition imposed under the
rules of the relevant plan.
Application of Committee discretion
The Committee has the discretion to determine
that an executive director is a good leaver.
The Committee retains discretion to set the
vesting date. It should be noted that it is the
Committee’s policy only to apply such
discretions if the circumstances at the time
are, in its opinion, sufficiently exceptional, and
to provide a full explanation to shareholders
where discretion is exercised.
Change of control
The proportion of the awards which shall vest will be determined by the Committee in
its absolute discretion taking into account such factors as the Committee may consider
relevant including, but not limited to, the time the award has been held by the
participant and having regard to the performance target and any further condition
imposed under the rules of the relevant plan.
It is the Committee’s policy to measure the
level of satisfaction of performance targets
ona change of control. It is the Committee’s
policy in normal circumstances to pro-rate
totime; however, in exceptional circumstances
where the nature of the transaction produces
exceptional value for shareholders and
provided the performance targets are met
theCommittee will consider whether
pro-rating is equitable.
There is no agreement between the Company and its directors or employees, providing for compensation for loss of office or
employment that occurs as a result of a takeover bid. The Committee reserves the right to make payments where such payments are
made in good faith in discharge of a legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or
compromise of any claim arising in connection with the termination of an executive director’s office or employment.
When determining any loss of office payment for a departing individual the Committee will always seek to minimise the cost to the
Company whilst seeking to address the circumstances at the time.
Consideration of conditions elsewhere in the Group
The constituent parts of the senior management team’s remuneration package (and the pay principles underpinning these) mirror
those of the executive directors. The performance conditions attaching to LTIP awards are applied consistently to all LTIP awards
made throughout the Company, and performance measures included within the Strategic Plan Awards are similarly aligned to the key
components of our Sunbelt 3.0 strategy.
When considering executive compensation, the Committee is advised of, and takes into account, changes to the remuneration of
employees within the Group. Executives engaged with team members throughout the year. Regular ‘town hall’ and employee briefings
are held during which updates are provided to the workforce on the Group’s performance and strategic initiatives, and how these
correlate to remuneration plans. During 2022/23, these have included specific consideration of fixed elements of remuneration,
considering the broader economic environment, as well as the structure of variable elements of remuneration, in light of the Group’s
progress against its strategic plans. The workforce is encouraged to raise questions and share feedback either during or after the
town hall events and employee briefings and we find a high level of engagement. Additionally, regular updates are provided to
employees of Company performance via email and through the Group’s employee engagement apps.
Employees are also able to provide feedback through the Group’s employee surveys on an anonymous basis, with employees and the
Board provided with updates as to action taken to respond to employee matters raised.
Our Remuneration policy is applied consistently throughout the organisation and as such enables our employees to understand the
Remuneration policy as it applies to them, and enables alignment between the executive directors and the wider workforce. This
includes our policy on setting fixed pay levels, the depth of participation in our short- and long-term incentives, and the measures and
targets set to determine the pay-out of these. The Committee (and the Board as a whole) continues to keep under review our approach
to consulting employees on all matters – including remuneration – and is committed to evolving further its approach over time,
as appropriate.
Ashtead Group plc Annual Report & Accounts 2023
111
DIRECTORS’ REPORT
Managing potential conflicts of interest
In order to avoid any conflict of interest, remuneration is managed through well-defined processes ensuring that no individual is
involved in the decision-making process related to their own remuneration. In particular, the remuneration of all executive directors
isset and approved by the Committee; none of the executive directors is involved in the determination of their own remuneration
arrangements.
The Committee also receives support from external advisers and evaluates the support provided by those advisers annually to ensure
that advice is independent and appropriate.
Remuneration policy for non-executive directors
The remuneration of the non-executive directors is determined by the Board within limits set out in the Articles of Association. None of
the non-executive directors has a service contract with the Company and their appointment is therefore terminable by the Board or the
director at any time. When recruiting a non-executive director, the remuneration arrangements offered will be in line with the policy
table below:
Approach to fees Basis of fees
Fees are set at a level to attract and retain high calibre non-executive
directors.
Each non-executive director is paid a basic fee for undertaking
non-executive director and board responsibilities.
Fees are reviewed on a regular basis to ensure they reflect the time
commitment required and practice in companies of a similar size and
complexity.
Additional fees are paid in relation to extra responsibilities
undertaken, such as to the chair and the chairs of the Audit and
Remuneration Committees and the senior independent director.
The Company pays any reasonable expenses that a non-executive
director incurs in carrying out their duties as a director (including any
tax arising thereon) and other modest benefits as appropriate.
Annual report on remuneration
Single total figure for remuneration (audited information)
Executive directors
The single figure for the total remuneration received by each executive director for the year ended 30 April 2023 and the prior year is
shown in the table below:
Brendan Horgan
1
Michael Pratt
1
Total
1
2023
$’000
2022
$’000
2023
£’000
2022
£’000
2023
$’000
2021
$’000
Fixed remuneration Salary 1,082 1,030 588 560 1,788 1,791
Benefits
2
21 43 6 11 28 58
Pension
3
23 20 35 34 65 66
Total fixed 1,126 1,093 629 605 1,881 1,915
Variable remuneration DBP
4
3,120 1,777 1,266 702 4,711 2,731
PSP
5
3,896 3,039 1,379 1,085 5,553 4,354
Total variable 7,016 4,816 2,645 1,787 10,264 7,085
Total 8,142 5,909 3,274 2,392 12,145 9,000
Notes
1
Brendan Horgan’s salary is denominated in US dollars whereas Michael Pratt’s salary is denominated in sterling. For the purpose of this disclosure, amounts have been
shown in the currency in which salary is denominated, while the total remuneration amount is shown in US dollars translated at the average exchange rate for the year.
2 Benefits include the taxable benefit of company owned cars, private medical insurance and subscriptions and other taxable allowances. Other taxable allowances include
car, travel and accommodation allowances.
3 The amount for Michael Pratt represents cash payments in lieu of pension contributions at 6% (2022: 6%) of salary, in line with the pension contribution offered to the UK
workforce. The amount included for Brendan Horgan represents the co-match under Sunbelt’s 401K defined contribution pension plan and 409A deferred compensation
plan, and is in line with the pension arrangements offered to our US workforce.
4
DBP includes the cash received by each director from the DBP for 2022/23 performance as explained on page 113. This includes all this year’s bonus and the brought
forward deferred share equivalents for each director.
5 The PSP value is calculated as the number of shares vesting, valued at the market value of those shares, plus the payment in lieu of dividends paid during the vesting
period. Market value is the market value on the day the awards vest (if they vest before the date the financial statements are approved) or the average market value for the
last three months of the financial year (if the awards vest after the date the financial statements are approved). The 2020 award will vest at 100% on 19 June 2023 and has
been valued at an average market value of 5,169p for the three months ended 30 April 2023, plus 154.4p per share in lieu of dividends paid during the vesting period. The
PSP value for 2022 has been adjusted to reflect the actual market value on the date of vesting of 3,474p.
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
112
The value attributable to the 2019 and 2020 PSP awards within the single total figure for remuneration reflects the appreciation of the
share price since the awards were granted. This is illustrated as follows:
Chief executive – Brendan Horgan ($’000) Chief financial officer – Michael Pratt (£’000)
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
PSP 2019
PSP 2020
PSP 2020
200 400 600 800 1,000 1,200 1,400 1,600
0
0
1,959 1,080
700 385
2,00 2 1,894
709 670
PSP 2019
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
PSP 2019
PSP 2020
PSP 2020
200 400 600 800 1,000 1,200 1,400 1,600
0
0
1,959 1,080
700 385
2,00 2 1,894
709 670
PSP 2019
Performance element based on share price at date of grant Share price appreciation element since grant date plus cash in lieu ofdividends
The Company believes that the charts above show the strong alignment of interests between the executive directors and shareholders
reflected in the share price appreciation over the performance period. The share price at the time the 2020 PSP award was granted
(2,736p in June 2020), was commensurate with the prevailing share price immediately prior to the outbreak of the COVID-19 pandemic
and ahead of the share price at the time the 2019 PSP award was granted (2,320p). The Committee is satisfied that the share price
performance since grant is supported by the strong financial performance of the business over the period and that the vesting of the
awards (which are subject to a further two-year holding period post vesting) will not give rise to windfall gains for the executives.
Directors’ pension benefits (audited information)
Brendan Horgan is a member of the Sunbelt 401K defined contribution pension plan and the 409A deferred compensation plan. He is
entitled to a company co-match conditional on contributing into the 401K plan or deferring into the 409A plan. The co-match is limited
to amounts permitted by regulatory agencies and is affected either by a company payment into the 401K plan or an enhanced deferral
into the 409A plan and was $22,269 in 2022/23.
At 30 April 2023, the total amount available to Brendan Horgan but deferred under the Sunbelt deferred compensation plan was
$991,394. This includes an allocated investment gain of $10,943 (2022: loss of $104,693).
Michael Pratt received a cash payment in lieu of pension contributions of 6% of base salary, in line with the wider UK workforce.
The Deferred Bonus Plan (audited information)
The performance targets for the DBP for the year, which were equally weighted, were as follows:
Group
adjusted
pre-tax profit
Free
cash flow
Forfeiture $1,500m n/a
Entry 10% $1,830m $140m
Threshold 30% $1,880m $175m
Target 50% $1,935m $210m
Maximum 100% $2,150m $280m
Actual – reported $2,273m $531m
Actual – budgeted exchange rates $2,281m $531m
For the year to 30 April 2023, the adjusted pre-tax profit for Ashtead Group plc was $2,281m and free cash flow was $531m, both at
budget exchange rates. As a result, Brendan Horgan and Michael Pratt earned 100% of their maximum bonus entitlements. These are
equivalent to 200% of base salary for Brendan Horgan ($2,163,000) and 150% of base salary for Michael Pratt (£882,000).
The three-year period of the DBP ended on 30 April 2023. Under the terms of the DBP, there was no forfeiture of brought forward
share equivalent awards. The share equivalent awards are summarised below:
Number of share equivalent awards Value of
released
awards
‘000
Brought
forward Released Granted
Carried
forward
Brendan Horgan 16,641 (16,641) – – $957
Michael Pratt 8,394 (8,394) – – £384
Ashtead Group plc Annual Report & Accounts 2023
113
DIRECTORS’ REPORT
The Performance Share Plan / LTIP
The performance criteria represent a balanced and holistic approach involving four measures selected because delivery of them
through the cycle is a significant challenge and the achievement of them will deliver optimum sustainable performance and
shareholder value creation over the long-term. The performance criteria are as follows:
Performance criteria (measured over three years)
Award date Financial year TSR (40%) EPS (25%) RoI (25%) Leverage (10%) Status
4/7/19 2019/20
25% of this element
of this award will
vest for median
performance with
full vesting at the
upper quartile.
TSR is measured
against the FTSE 350
companies ranked
50th to 100th by
market capitalisation
from 1 May of the
year of grant.
25% of this element
of the award will vest
if EPS compound
growth for the three
years ending 30 April
immediately prior to
the vesting date is 6%
per annum, rising to
100% vesting if EPS
compound growth is
equal to, or exceeds,
12% per annum.
25% of this element
of the award will
vest at an RoI of 10%
with 100% vesting
with an RoI of 15%
(excluding IFRS 16).
100% of this
element of the
award will vest if
the ratio of net debt
to EBITDA is equal
to, or is less than,
2 times (2.4 times
post IFRS 16).
2019 award
98.7% vested
in July 2022.
19/6/20 2020/21
2020 award
100% will vest
inJune 2023.
6/7/21 2021/22
As above, except TSR
is measured against
the constituents of
the FTSE 100 from
1 May of the year
ofgrant.
2021 award
TSR performance is
in the third quartile,
EPS increased by
33%, RoI of 19% and
leverage of 1.6 times.
4/7/22 2022/23
2022 award
TSR performance
is in the second
quartile, EPS
increased by 27%,
RoI of 19% and
leverage of 1.6 times.
For performance between the lower and upper target ranges, vesting of the award is scaled on a straight-line basis.
The 2019 PSP award vested at 98.7% on 4 July 2022 with EPS compound growth (calculated consistently with 2018/19, excluding IFRS
16) for the three years ended 30 April 2022 of 11.6%, falling between the lower and upper thresholds of 6% and 12%, resulting in 23.7%
of the EPS element of the award vesting and the Company’s TSR performance ranked it first within the FTSE 350 companies ranked
50th to 100th by market capitalisation (excluding investment trusts). RoI was 18% and average leverage was 1.7 times.
The 2020 PSP award will vest in full on 19 June 2023 with EPS compound growth for the three years ended 30 April 2023 of 21%,
exceeding the upper threshold of 12%, and the Company’s TSR performance ranked it first within the FTSE 350 companies ranked 50th
to 100th by market capitalisation (excluding investment trusts). RoI was 19% and average leverage was 1.6 times.
EPS is based on adjusted profit after taxation stated in US dollars. TSR performance is measured relative to FTSE companies of
comparable market capitalisation (excluding investment trusts) rather than a specific comparator group of companies because there
are few direct comparators to the Company listed in London. The Company’s TSR performance relative to the FTSE 100 (excluding
investment trusts) is shown on page 117.
It is a condition of the PSP and LTIP awards that directors at the time of the award are required to hold any vested shares for a further
two-year period following the vesting date.
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
114
The Strategic Plan Award
Strategic Plan Awards were made in 2021/22. The performance criteria represent the stretching financial and operational aspirations
of Sunbelt 3.0, balanced by linkage to measures that ensure growth is delivered in a sustainable and responsible fashion.
Weighting Measure
Targets
CommentaryThreshold Stretch
1
Grow General
Tool and advance
our clusters
50% Increase in EBITDA: measured
at constant currency plan rates
$820m $1,150m
Aligns with our ambition to deliver a
US rental growth of 2x market rate,
together with continued strong margin
and RoI performance
2
Amplify Specialty
3
Advance
technology
15% Operational improvement:
improvement in ‘cap factor’
(pure rental revenue / average
original equipment cost) in
North America
4.0%
by FY24
6.0%
by FY24
Reflects ambition to exceed our
capfactor performance over the
lastfive years
15% Customer: ‘Deliver the Perfect
Rental’: targeting a reduction
indispute resolution time over
the three-year period ending
30April 2024
6.0%
reduction
12.0%
reduction
Targets set ahead of past
performance, to underpin our focus on
customer retention, relationships and
response times
4
Lead with ESG
10% Environment: reduce carbon
intensity: aligned directly to our
‘35x30’ goal
11.0%
reduction
15.0%
reduction
Reflects ESG’s critical role to
unlocking structural benefits across
the Group
Targets are aligned with our long-term
goal of a 35% reduction by 2030
10% Employee: engagement in
2023/24: maintaining our
excellent level of engagement in
the US, and expecting other
geographies to match it
75% 85%
Our ambition is to set a benchmark
forour market, recognising the
criticality of an engaged and
enthusiastic workforce to Ashtead’s
continued success
5
Dynamic capital
allocation
A consistent application of our capital allocation policy to optimise deployment for the benefit of all
stakeholders. Sunbelt 3.0 underpins our focus on value creation for our people, our customers, our
communities and our investors
25% of each element of the Strategic Plan Award will vest at the threshold target and 100% will vest at the stretch target, subject to
achieving the EBITDA threshold target. For performance between the threshold and stretch the award is scaled on a straight-line basis.
Single total figure of remuneration (audited information)
Non-executive directors
Fees Benefits
1
Total
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Angus Cockburn 120 100 2 4 122 104
Jill Easterbrook 80 67 – 1 80 68
Tanya Fratto 80 67 11 – 91 67
Renata Ribeiro
2
80 23 23 13 103 36
Lucinda Riches 100 83 – – 100 83
Lindsley Ruth 80 67 7 – 87 67
Paul Walker 450 383 10 3 460 386
990 790 53 21 1,043 811
Notes
1
Benefits relate to travel, accommodation and subsistence expenditure met by the Company for Board members to attend meetings of the Board and undertake other
activities on behalf of the Company. The benefits figures above includes those amounts where such expenditure has been reimbursed in attending the Group’s head office
location in London.
2
Renata Ribeiro joined the Board during 2021/22. Her fees in relation to 2022 reflect this part-year tenure.
The non-executive directors did not receive any remuneration from the Company in addition to the fees detailed above.
Ashtead Group plc Annual Report & Accounts 2023
115
DIRECTORS’ REPORT
Scheme interests awarded between 1 May 2022 and 30 April 2023 (audited information)
Long-Term Incentive Plan
The nil-cost awards made on 4 July 2022 are subject to the rules of the LTIP and the achievement of stretching performance
conditions, which are set out on page 114, over a three-year period to 30 April 2025. The awards are summarised below:
Number
Face value
of award
1
‘000
Face value of
award as %
of base salary
% of award vesting
for target
performance
Brendan Horgan 89,923 $3,785,250 350% 32.5%
Michael Pratt 38,083 £1,323,000 225% 32.5%
Note
1
LTIP awards were allocated on 4 July 2022 using the closing mid-market share price (3,474p) of Ashtead Group plc on that day and for Brendan Horgan, the closing USD/
GBP exchange rate ($1,2117).
Payments to past directors (audited information)
No payments were made in the current year to past directors of the Company.
Geoff Drabble stepped down from the Board on 1 May 2019 and Sat Dhaiwal stepped down from the Board on 31 July 2018. In June
2022 the Employee Share Ownership Trust released 42,097 shares to Geoff Drabble and 5,204 shares to Sat Dhaiwal. These shares
were granted under the 2017 PSP award and vested in June 2020 and were required to be held by the former directors for two years
from their vesting date. In July 2023, the Employee Share Ownership Trust will release 16,898 shares to Geoff Drabble. These shares
were granted under the 2018 PSP award and vested in July 2021 and were required to be held by Geoff Drabble for two years from their
vesting date.
Payments for loss of office (audited information)
During the year there have been no payments made to directors for loss of office.
Statement of executive directors’ shareholdings and share interests (audited information)
The executive directors are subject to a minimum shareholding obligation. The chief executive is expected to hold shares at least equal
to 500% of base salary and the remaining executive directors are expected to hold shares at least equal to 300% of base salary. As
shown below, the executive directors comply with these shareholding requirements.
Shares held
outright at
30 April
2023
1
Shares held
outright at
30 April 2023
as a % of
salary
2
Outstanding unvested
plan interests
subject to
performance
measures
3
Total of all share
interests and
outstanding
plan interests
at 30 April 2023
Brendan Horgan 475,000 2,743% 230,170 705,170
Michael Pratt 314,000 2,654% 108,699 422,699
There have been no changes in the outstanding share interests of executive directors as of the date of this report.
Notes
1
Interests in shares held at 30 April 2023 include shares held by connected persons.
2
In calculating shareholding as a percentage of salary, the average share price for the three months ended 30 April 2023, the sterling/dollar exchange rate at 30 April 2023,
and the directors’ salaries at 1 May 2023, have been used.
3 All outstanding plan interests take the form of rights to receive shares.
Performance Share Plan and Long-Term Incentive Plan awards
Awards made under the PSP and LTIP (excluding the Strategic Plan Award detailed below), and those which remain outstanding at
30April 2023, are shown in the table below:
Date of
grant
Held at
30 April 2022
Exercised
during the
year
Lapsed
during the
year
Granted
during the
year
Held at
30 April 2023
Brendan Horgan 04.07.19 70,600 69,682 918 – –
19.06.20 60,911 – – – 60,911
06.07.21 34,435 – – – 34,435
04.07.22 – – – 89,923 89,923
Michael Pratt 04.07.19 30,550 30,153 397 – –
19.06.20 25,905 – – – 25,905
06.07.21 20,679 – – – 20,679
04.07.22 – – – 38,083 38,083
The performance conditions attaching to the PSP and LTIP awards are detailed on page 114. It is a condition of the PSP and LTIP
awards that directors at the time of the award are required to hold any vested shares for a further two-year period following the
vesting date. The market price of the awards granted during the year was 3,474p on the date of grant.
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
116
Strategic Plan Award
Awards under the LTIP with respect to the Strategic Plan Award, and those which remain outstanding at 30 April 2023, are shown in
the table below:
Date of grant
Held at
30April 2022
and 2023
Brendan Horgan 17.09.21 44,901
Michael Pratt 17.09.21 24,032
The performance conditions attaching to the Strategic Plan Award are detailed on page 115. It is a condition of the LTIP awards that
directors at the time of the award are required to hold any vested shares for a further two-year period following the vesting date.
Statement of non-executive directors’ shareholding (audited information)
As at 30 April 2023, the non-executive directors’ interests in ordinary shares of the Company were:
Number
Paul Walker 14,000
Angus Cockburn 1,000
Jill Easterbrook –
Tanya Fratto 1,000
Renata Ribeiro 140
Lucinda Riches 5,000
Lindsley Ruth 2,250
The market price of the Company’s shares at the end of the financial year was 4,577p and the highest and lowest closing prices during
the financial year were 5,874p and 3,359p respectively.
There have been no changes in the outstanding share interests of non-executive directors as of the date of this report.
Performance graph and table
Over the last 10 years the Company has generated an eight-fold total shareholder return (‘TSR’) which is shown below. The FTSE 100 is
the Stock Exchange index the Committee considers to be the most appropriate to the size and scale of the Company’s operations over
that period.
Total shareholder return
200
0
400
600
800
1,000
1,400
1,200
Ashtead
FTSE 100
April
13
April
14
April
15
April
16
April
17
April
18
April
19
April
20
April
21
April
22
April
23
Ashtead Group plc Annual Report & Accounts 2023
117
DIRECTORS’ REPORT
During the same period, the total remuneration received by the Group chief executive has reflected the strong performance of
thebusiness:
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
$’000 £’000
Total remuneration 8,142 5,909 7,085 4,281 6,084 5,144 5,461 3,321 4,165 7,272
Adjusted profit before tax 2,273 1,824 1,316 1,343 1,110 927 793 645 490 362
Proportion of maximum annual
bonuspotentialawarded 100% 100% 100% – % 100% 100% 100% 98% 100% 100%
Proportion of PSP vesting 100% 98.7% 94.7% 100% 100% 100% 100% 97.5% 100% 100%
In 2019/20, Brendan Horgan was appointed as Group chief executive. The figures for 2014 to 2019 are for the then chief executive,
GeoffDrabble. Amounts have been presented in the currency in which the chief executive’s pay was denominated.
Percentage change in remuneration of all directors
The table below summarises the percentage change in the annualised remuneration of the Board and the employees of the Group.
This information will build up to display a five-year history. For Michael Pratt and the non-executive directors, the percentage change
in remuneration is calculated in sterling so as to remove the impact of exchange rate movements.
Brendan Horgan and Michael Pratt both participate in the Deferred Bonus Plan and their annual bonus reflects payments under this
plan. Details are provided on page 113.
% change in salary or fees % change in benefits
4
% change in annual bonus
2023 2022 2021 2023 2022 2021 2023 2022 2021
Executive directors
Brendan Horgan 5% – % – % -51% -4% 1% 76% 29% 70%
Michael Pratt 5% 18% – % -45% -48% – % 80% 48% 64%
Non-executive
directors
Angus Cockburn 20% 11% – % -45% Note 4 – % n/a n/a n/a
Jill Easterbrook
1
20% 11% – % -52% Note 4 – % n/a n/a n/a
Tanya Fratto 20% 11% – % Note 4 – % -100% n/a n/a n/a
Renata Ribeiro
2
– % n/a n/a 75% n/a n/a n/a n/a n/a
Lucinda Riches 20% 11% – % – % – % – % n/a n/a n/a
Lindsley Ruth 20% 11% – % Note 4 – % – % n/a n/a n/a
Paul Walker 17% 10% – % 250% Note 4 -100% n/a n/a n/a
Employees of the
Group
3
7% 5% 2% – % – % – % -1% 26% 45%
Notes
1
Fees relating to 2020/21 have been annualised to reflect that Jill Easterbrook joined the Board during 2019/20.
2
Renata Ribeiro joined the Board in January 2022 and therefore fees relating to 2021/22 have been annualised.
3
As required under The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the legislative requirement is to provide a
comparison to employees of the parent company. The Group’s employees are primarily employed through the Group’s main trading companies and as such the analysis
above has been prepared on a group-wide basis as this is a more closely aligned comparative group considering the global nature of the Group’s business. For the
employees of the parent company, the percentage change in salary is 6% (2022: 10%, 2021: nil%), the percentage change in benefits is nil% (2022: nil%, 2021: nil%) and the
percentage change in annual bonus is 29% (2022: 21%, 2021: 41%).
4
Travel, accommodation and subsistence expenditure is met by the Company for Board members to attend meetings of the Board and undertake other activities on behalf
of the Company. Amounts for non-executive directors within the benefits figure includes those amounts where such expenditure has been reimbursed in relation to
amounts incurred in attending the Group’s head office location in London, details of which are provided in the single total figure of remuneration table for non-executive
directors on page 117. Where there were no comparative figures, a percentage change in benefits cannot be determined.
Relative importance of spend on pay
The following table shows the year-on-year change in returns to shareholders and aggregate staff costs (see Note 4 of the
financialstatements).
2022/23
$m
2021/22
$m
Change
%
Aggregate staff costs 2,222 1,830 21%
Returns to shareholders 697 768 -9%
Returns to shareholders include dividends of $437m (2022: $354m) and share buybacks of $261m (2022: $414m). The Group declared
adividend of 100.0 cents per share (2022: 80.0 cents per share).
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
118
Chief executive pay compared to pay of Group employees
Ashtead is a decentralised, store-based business employing c. 25,000 people including drivers, mechanics, yard operatives and sales
personnel. We apply the same reward principles across the business. Our overall remuneration packages have to be competitive when
compared with similar roles in other organisations against which we compete for talent. Thus, not only do we compete against other
rental companies but also, for example, distribution businesses for drivers and mechanics. Accordingly, we consider both rental and
other similar businesses when referencing our remuneration levels. For our chief executive, we are referencing a small group of chief
executives of major organisations with the skillset to manage a fast-growing, multi-location and international business.
Given this business profile, all the pay ratio reference points compare our chief executive’s remuneration with that of store-based
employees. Year-to-year movements in the pay ratio will be driven largely by changes in our chief executive’s variable pay. These
movements will outweigh significantly any other changes in pay across the Group. Whatever the chief executive pay ratio, the Group
iscommitted to continuing to invest in leading remuneration packages for all our employees.
The total pay and benefits of group-wide employees at the 25th, 50th and 75th percentile, and the ratios between the chief executive
and these employees using the chief executive’s single total remuneration figure for 2022/23 of $8,142,000 are as follows:
Group-wide employees
1
25th percentile pay ratio 50th percentile pay ratio 75th percentile pay ratio
Year Method
Total pay
and benefits Ratio
Total pay
and benefits Ratio
Total pay
and benefits Ratio
2022/23 B $55,031 148:1 $71,075 115:1 $119,646 68:1
2021/22 B $63,588 119:1 $71,210 107:1 $91,994 83:1
2020/21 B $ 37,338 162:1 $80,427 75:1 $92,354 65:1
2019/20 B $43,661 86:1 $59,362 6 3:1 $109,167 34:1
UK employees
25th percentile pay ratio 50th percentile pay ratio 75th percentile pay ratio
Year Method
Total pay
and benefits Ratio
Total pay
and benefits Ratio
Total pay
and benefits Ratio
2022/23 B £25,719 263:1 £31,403 216:1 £53,664 126:1
2021/22 B £24,819 225:1 £31,114 179:1 £35,885 156:1
2020/21 B £21,143 217:1 £24,763 185:1 £28,297 162:1
2019/20 B £20,566 14 4:1 £23,199 127:1 £32,041 92:1
Notes
1
Given the nature of the Group’s business, with c. 80% of employees based outside of the UK, the Group has additionally prepared the analysis on a group-wide basis.
2
The relevant employees at the 25th, 50th and 75th percentile were identified using existing gender pay data (option B) prepared using the latest available data in each year.
Due to the nature of the roles undertaken by the identified employees, and based on a review of their pay and benefits, the Company believes that the individuals identified
in each year are representative of the 25th, 50th and 75th percentile employees and further that option B is the most appropriate and practical approach to follow.
3
In calculating the total pay and benefits for the employees at the 25th, 50th and 75th percentile, adjustments were made to working hours to reflect a full time
equivalent employee.
4 The relevant salary components of total pay and benefits for group-wide employees at the 25th, 50th and 75th percentile are $39,723, $47,748 and $59,565 respectively.
The relevant salary components of total pay and benefits for UK employees at the 25th, 50th and 75th percentile are £24,133, £28,667 and £36,441 respectively.
The Group chief executive’s remuneration has a significant weighting towards variable pay to align his remuneration with Company
performance and as such, his total single figure may vary considerably from year to year depending on the performance of the Group.
Consequently, the increase in the chief executive pay ratios between 2021/22 and 2022/23 is primarily a result of the increase in the
chief executive’s variable remuneration due to the increase in the Group’s share price impacting the value of PSPs vesting and 2022/23
being the final year of the DBP cycle.
Further details as to how to seek to reward our employees are provided on page 65.
External appointments
The Company recognises that executive directors may be invited to become non-executive directors of other companies and that these
appointments can broaden their knowledge and experience to the benefit of the Company. Subject to Board approval, executive
directors may take up external appointments and the Group policy is for the individual director to retain any fee.
During the year under review, neither executive director held an external Board appointment.
Ashtead Group plc Annual Report & Accounts 2023
119
DIRECTORS’ REPORT
Remuneration for the year commencing 1 May 2023
Basic salary
Salary with effect from 1 May 2023:
Brendan Horgan $1,124,760
Michael Pratt £611,520
Benefits
Benefits will continue to be applied as per the policy and as in previous years.
Retirement benefits
Retirement benefits will be applied in accordance with the policy.
Deferred Bonus Plan
Brendan Horgan and Michael Pratt participate in the DBP. The maximum annual bonus opportunities as a percentage of salary are
unchanged at 200% for Brendan Horgan and 150% for Michael Pratt. The performance measures are adjusted Group profit before tax
and free cash flow. The specific targets set are deemed to be commercially sensitive but full disclosure will be provided on a
retrospective basis at the year-end.
Long-Term Incentive Plan
A 2023 LTIP award will be made as follows:
Value of
2023 award
’000
Basis of
award
% of salary
Brendan Horgan $3,937 350%
Michael Pratt £1,376 225%
These awards are based on the directors’ salaries as at 1 May 2023. Performance targets remain unchanged from the prior year.
Non-executive fees
Annual fees for the chair and non-executive directors, which remain unchanged as at 1 May 2023, are as follows:
Paul Walker £450,000
Angus Cockburn £120,000
Jill Easterbrook £80,000
Tanya Fratto £80,000
Renata Ribeiro £80,000
Lucinda Riches £100,000
Lindsley Ruth £80,000
For non-executive directors, fees comprise a base fee of £80,000, with a supplemental fee of £20,000 for each committee chair and
asupplemental fee of £20,000 for the senior independent director.
Consideration by the directors of matters relating to directors’ remuneration
The Company has established a Remuneration Committee (‘the Committee’) in accordance with the recommendations of the UK
Corporate Governance Code.
None of the Committee members has any personal financial interests, other than as shareholders, in the matters to be decided. None
of the members of the Committee is or has been at any time one of the Company’s executive directors or an employee. None of the
executive directors serves, or has served, as a member of the board of directors of any other company which has one or more of its
executive directors serving on the Company’s Board or Remuneration Committee.
The Group’s chief executive normally attends the meetings of the Committee to advise on operational aspects of the implementation of
existing policies and policy proposals, except where his own remuneration is concerned, as does the non-executive chair, Paul Walker.
Eric Watkins acts as secretary to the Committee. Under Lucinda Riches’ direction, the company secretary and Group chief executive
have responsibility for ensuring the Committee has the information relevant to its deliberations.
In formulating its policies, the Committee has access to professional advice from outside the Company, as required, and to publicly
available reports and statistics. The Committee appointed Ellason LLP (‘Ellason’) as its independent remuneration advisors with effect
from 1 January 2021. Ellason is a member of the Remuneration Consultants Group and adheres to its code in relation to executive
remuneration in the UK. The fees paid to Ellason for professional advice on remuneration during the year totalled £42,581 and were
charged on a time incurred basis. Ellason does not provide any other services to the Company and the Committee is satisfied that
Ellason is independent of both the Company and individual directors.
Remuneration report continued
Ashtead Group plc Annual Report & Accounts 2023
120
Main responsibilities of the Remuneration Committee
The principal duties of the Committee are:
− determining and agreeing with the Board the framework and policy for the remuneration of the executive directors and
senioremployees;
− ensuring that executive management is provided with appropriate incentives to encourage enhanced performance in a fair and
responsible manner;
− reviewing and determining the total remuneration packages for each executive director including bonuses and incentive plans;
− determining the policy for the scope of pension arrangements, service agreements, termination payments and compensation
commitments for each of the executive directors; and
− ensuring compliance with all statutory and regulatory provisions.
Summary of the Committee’s work during the year
The principal matters addressed during the year were:
− determining and agreeing with the Board the framework and policy for the remuneration of the executive directors and
senioremployees;
− assessment of the achievement of the executive directors against their Deferred Bonus Plan objectives;
− setting Deferred Bonus Plan performance targets for the year;
− assessment of performance for the vesting of the 2019 PSP awards;
− granting 2022 PSP awards and setting the performance targets attaching thereto;
− reviewing executive base salaries; and
− approving the Directors’ remuneration report for the year ended 30 April 2022.
Shareholder voting
An ordinary resolution concerning the Directors’ remuneration report will be put to shareholders at the forthcoming AGM.
Ashtead is committed to ongoing shareholder dialogue and considers carefully voting outcomes. Following the 2022 AGM, the
Committee continued to engage with shareholders, targeting in particular those identified as voting against the resolution and the
main shareholder representative bodies. Based on this engagement and additional conversations with proxy voting advisers, it is clear
that the main concerns relate to changes made to the Remuneration policy implemented in 2021.
The voting results of the most recent remuneration resolutions are set out below:
AGM For Against
2021/22 Directors’ annual report on remuneration
1
2022 67.3% 32.7%
2020/21 Directors’ remuneration policy
2
2021 60.7% 39.3%
Notes
1
22,265 votes were withheld out of total votes cast of 333,418,597 in relation to the 2021/22 Directors’ remuneration report at the 2022 AGM.
2
34,868,385 votes were withheld out of total votes cast of 303,715,038 in relation to the 2020/21 Directors’ remuneration policy at the 2021 AGM.
This report has been approved by the Remuneration Committee and is signed on its behalf by:
LUCINDA RICHES
Chair, Remuneration Committee
12 June 2023
Ashtead Group plc Annual Report & Accounts 2023
121
DIRECTORS’ REPORT
Pages 86 to 124 inclusive (together with the sections of the
AnnualReport incorporated by reference) form part of the
Directors’ report.
Other information, which forms part of the Directors’ report, can
be found in the following sections of the Annual Report:
Location
Acquisitions Financial statements – Note 27
Audit Committee report Pages 97 to 101
Board and committee membership Pages 88 and 89
Corporate governance report Pages 90 to 96
Directors’ biographies Pages 88 and 89
Directors’ responsibility statement Page 124
Events after the balance sheet date Financial statements – Note 29
Financial risk management Financial statements – Note 25
Future developments Page 57
Greenhouse gas emissions Pages 68 to 70
Nomination Committee report Page 102
Other statutory disclosures Pages 122 and 123
Our people Pages 62 to 67
Pension schemes Financial statements – Note 24
Results and dividends Pages 51 to 57
Share capital Financial statements – Note 22
Social responsibility Pages 72 to 74
Share capital and major shareholders
Details of the Company’s share capital are given in Note 22 to the
financial statements.
Acquisition of own shares
At the 2022 AGM, the Company was authorised to make market
purchases of up to c. 66m ordinary shares. The Company
acquired 5.2m (1.15% of total issued share capital) shares under
this authority during the year. This authority will expire on the
earlier of the next AGM of the Company or 16December 2023.
A special resolution will be proposed at this year’s AGM to
authorise the Company to make market purchases of up to 66m
ordinary shares.
Voting rights
Subject to the Articles of Association, every member who is
present in-person at a general meeting shall have one vote and
on a poll every member who is present in-person or by proxy
shall have one vote for every share of which he or she is the
holder. The Trustees of the Employee Share Ownership Trust
ordinarily follow the guidelines issued by the Association of
British Insurers and do not exercise their right to vote at general
meetings.
Under the Companies Act 2006, members are entitled to appoint
a proxy, who need not be a member of the Company, to exercise
all or any of their rights to attend and speak and vote on their
behalf at a general meeting or any class of meeting. A member
may appoint more than one proxy provided that each proxy is
appointed to exercise the rights attached to a different share or
shares held by that member. A corporate member may appoint
one or more individuals to act on its behalf at a general meeting
or any class of meeting as a corporate representative.
Thedeadline for the exercise of voting rights is as stated in the
notice of the relevant meeting.
Transfer of shares
Certified shares
(i) Transfers may be in favour of more than four joint holders,
butthe directors can refuse to register such a transfer.
(ii)
The share transfer form must be delivered to the registered
office, or any other place decided on by the directors. The
transfer form must be accompanied by the share certificate
relating to the shares being transferred, unless the transfer
isbeing made by a person to whom the Company was not
required to, and did not send, a certificate. The directors can
also ask (acting reasonably) for any other evidence to show that
the person wishing to transfer the shares is entitled to do so.
CREST shares
(i) Registration of CREST shares can be refused in the
circumstances set out in the Uncertificated Securities
Regulations.
(ii)
Transfers cannot be in favour of more than four joint holders.
Significant shareholders
Based on notifications received, the holdings of 5% or more of the
issued share capital of the Company as at 12 June 2023 (the latest
practicable date before approval of the financial statements) are
as follows:
%
BlackRock, Inc. 5%
Details of directors’ interests in the Company’s ordinary share
capital and in options over that share capital are given in the
Directors’ remuneration report on pages 103 to 121. Details of all
shares subject to option are given in the notes to the financial
statements on page 156.
Change of control provisions in loan agreements
A change in control of the Company (defined, inter alia, as a
person or a group of persons acting in concert gaining control of
more than 30% of the Company’s voting rights) leads to an
immediate event of default under the Company’s asset-based
senior lending facility. In such circumstances, the agent for the
lending group may, and if so directed by more than 50% of the
lenders shall, declare the amounts outstanding under the facility
immediately due and payable.
Such a change of control also leads to an obligation, within 30
days of the change in control, for the Group to make an offer to
the holders of the Group’s $550m senior secured notes, due 2026,
$600m senior secured notes, due 2027, $600m senior secured
notes, due 2028, $600m senior secured notes, due 2029, $750m
senior secured notes, due 2031, $750m senior secured notes, due
2032, and $750m senior secured notes, due 2033, to redeem
them at 101% of their face value.
Appointment and removal of directors
Unless determined otherwise by ordinary resolution, the
Company is required to have a minimum of two directors and
amaximum of 15 directors (disregarding alternate directors).
OTHER STATUTORY DISCLOSURES
Ashtead Group plc Annual Report & Accounts 2023
122
The directors are not required to hold any shares in the Company
by the Articles of Association.
The Board can appoint any person to be a director. Any person
appointed as a director by the Board must retire from office at the
first AGM after appointment. A director who retires in this way is
then eligible for re-appointment.
The Articles state that each director must retire from office if
theyheld office at the time of the two preceding AGMs and did
notretire at either of them. In accordance with the UK Corporate
Governance Code, all directors are subject to annual election
bythe shareholders.
In addition to any power to remove directors conferred by
legislation, the Company can pass a special resolution to remove
a director from office even though their time in office has not
ended and can appoint a person to replace a director who has
been removed in this way by passing an ordinary resolution.
Any director stops being a director if (i) they give the Company
written notice of their resignation; (ii) they give the Company
written notice in which they offer to resign and the directors
decide to accept this offer; (iii) all the other directors (who must
comprise at least three people) pass a resolution or sign a written
notice requiring the director to resign; (iv) a registered medical
practitioner who is treating that person gives a written opinion to
the Company stating that that person has become physically or
mentally incapable of acting as a director and may remain so for
more than three months; (v) by reason of that person’s mental
health, a court makes an order which wholly or partly prevents
that person from personally exercising any powers or rights
which that person would otherwise have; (vi) they have missed
directors’ meetings (whether or not an alternate director
appointed by them attends those meetings) for a continuous
period of six months without permission from the directors and
the directors pass a resolution removing the director from office;
(vii) a bankruptcy order is made against them or they make any
arrangement or composition with their creditors generally; (viii)
they are prohibited from being a director under the legislation;
or(ix) they cease to be a director under the legislation or they
areremoved from office under the Articles of Association.
Powers of the directors
Subject to the legislation, the Articles of Association and any
authority given to the Company in a general meeting by special
resolution, the business of the Company is managed by the Board
of directors that can use all of the Company’s powers to borrow
money and to mortgage or charge all or any of the Company’s
undertaking, property and assets (present and future) and
uncalled capital of the Company and to issue debentures and
other security and to give security, either outright or as collateral
security, for any debt, liability or obligation of the Company or of
any third party.
Directors and directors’ insurance
Details of the directors of the Company are given on pages 88 and
89. The policies related to their appointment and replacement are
detailed on pages 94, 102 and 122. Each of the directors as at the
date of approval of this report confirms, as required by section 418
of the Companies Act 2006 that to the best of their knowledge and
belief:
(1)
there is no relevant audit information of which the Company’s
auditor is unaware; and
(2) each director has taken all the steps that he ought to have
taken to make himself aware of such information and to
establish that the Company’s auditor is aware of it.
The Company has maintained insurance throughout the year to
cover all directors against liabilities in relation to the Company
and its subsidiary undertakings.
Amendment of Articles of Association
The Articles of Association of the Company may be amended by
aspecial resolution.
Policy on payment of suppliers
Suppliers are paid in accordance with the individual payment
terms agreed with each of them. The number of Group creditor
days at 30 April 2023 was 43 days (2022: 43 days) which reflects
the terms agreed with individual suppliers. There were no trade
creditors in the Company’s balance sheet at any time during the
past two years.
Political and charitable donations
Charitable donations in the year amounted to $3,079,336 in total
(2022: $1,686,140). Reflecting the Group’s policy of not making
donations of a political nature, no political donations have been
made in either year.
Disclosures required by Listing Rule 9.8.4R
The relevant disclosure concerning dividend waiver can be found
on page 156. The remaining disclosures required by Listing Rule
9.8.4R are not applicable to the Company.
Going concern
After making appropriate enquiries, the directors have a
reasonable expectation that the Company and the Group have
adequate resources to continue in operation for the foreseeable
future and consequently, that it is appropriate to adopt the going
concern basis in preparing the financial statements.
Auditor
Deloitte LLP was appointed external auditor in 2004. In
accordance with the provisions of The Statutory Audit Services
forLarge Companies Market Investigation (Mandatory use of
Competitive Tender Process and Audit Committee
Responsibilities) Order 2014, we are required to rotate auditor
following the 2023 audit. The Board has decided to appoint
PricewaterhouseCoopers LLP as the Group’s external auditor
forthe April 2024 audit and, in accordance with section 489 of the
Companies Act 2006, a resolution concerning the appointment of
PricewaterhouseCoopers LLP and authorising the directors to fix
its remuneration, will be proposed at the AGM.
Annual General Meeting
The AGM will be held at 11.30am on Wednesday, 6 September
2023 at Wax Chandlers Hall, 6 Gresham Street, London, EC2V
7AD. An explanation of the business to be transacted at the AGM
will be circulated to shareholders and will be available on the
Company’s corporate website.
Approval of the Directors’ report
The Directors’ report set out on pages 86 to 124 was approved by
the Board on 12 June 2023 and has been signed by the Company
secretary on its behalf.
ERIC WATKINS
Company secretary
12 June 2023
Ashtead Group plc Annual Report & Accounts 2023
123
DIRECTORS’ REPORT
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations. Company law requires the directors to prepare
financial statements for each financial year. Under that law the
directors have prepared the Group and Company financial
statements in accordance with international accounting
standards in conformity with the requirements of the Companies
Act 2006.
Under company law the directors must not approve the accounts
unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit or loss of the
Company for that period. In preparing these financial statements,
International Accounting Standard 1 requires that directors:
− properly select and apply accounting policies;
− present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and
understandable information;
− provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial
performance; and
− make an assessment of the Company’s ability to continue as a
going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets
andhence, for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
ofthe corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differfrom legislation in other jurisdictions.
Responsibility statement
We confirm to the best of our knowledge:
− the consolidated financial statements, prepared in accordance
with IFRS in conformity with the requirements of the
Companies Act 2006, give a true and fair view of the assets,
liabilities, financial position and profit of the Group;
− the Strategic report includes a fair review of the development
and performance of the business and the position of the Group,
together with a description of the principal risks and
uncertainties that it faces; and
− the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide information
necessary for shareholders to assess the Group’s position,
performance, business model and strategy.
By order of the Board
ERIC WATKINS
Company secretary
12 June 2023
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Ashtead Group plc Annual Report & Accounts 2023
124
FINANCIAL
STATEMENTS
148 12 Cash and cash equivalents
149 13 Property, plant and
equipment
150 14 Right-of-use assets
151 15 Intangible assets including
goodwill
152 16 Other non-current assets
153 17 Trade and other payables
153 18 Lease liabilities
154 19 Borrowings
155 20 Provisions
155 21 Deferred tax
156 22 Share capital and reserves
156 23 Share-based payments
157 24 Pensions
159 25 Financial risk management
162 26 Notes to the cash flow
statement
163 27 Acquisitions
165 28 Contingent liabilities
166 29 Events after the balance
sheet date
166 30 Related party transactions
166 31 Capital commitments
166 32 Employees
167 33 Parent company information
CONTENTS
126 Independent Auditor’s report to
the members of Ashtead Group plc
Consolidated financial statements
133 Consolidated income statement
133 Consolidated statement of
comprehensive income
134 Consolidated balance sheet
135 Consolidated statement of
changes in equity
136 Consolidated cash flow statement
Notes to the consolidated
financial statements
137 1 General information
137 2 Accounting policies
142 3 Segmental analysis
144 4 Operating costs and
other income
145 5 Exceptional items and
amortisation
145 6 Net financing costs
146 7 Taxation
147 8 Earnings per share
147 9 Dividends
147 10 Inventories
148
11 Trade and other receivables
125
Ashtead Group plc Annual Report & Accounts 2023
FINANCIAL STATEMENTS
Report on the audit of the financial statements
1. Opinion
In our opinion:
− the financial statements of Ashtead Group plc (the ‘Company’) and its subsidiaries (the ‘Group’) give a true and fair view of the state of
the Group’s and of the Company’s affairs as at 30 April 2023 and of the Group’s profit for the year then ended;
− the Group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting
standards;
− the Company financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
− the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
− the Consolidated income statement;
− the Consolidated statement of comprehensive income;
− the Consolidated balance sheet;
− the Consolidated statement of changes in equity;
− the Consolidated cash flow statement;
− the related Notes 1 to 32, including the accounting policies; and
− Note 33, which includes the Company balance sheet, Company statement of changes in equity and Company cash flow statement.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted
international accounting standards and, as regards the Company financial statements, as applied in accordance with the provisions of
the Companies Act 2006.
2. Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the Group and the Company for the year are disclosed in Note 4 to the financial statements. We confirm that we have not
provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the current year were:
− carrying value of rental fleet;
− revenue recognition – manual topside intervention.
We consider the level of risks for all identified key audit matters to be similar to the previous year.
Materiality
The materiality that we used for the Group financial statements was $83.0m, which was determined on the basis of the
three-year average (FY21, FY22, FY23) profit before tax.
Scoping
Consistent with previous years, we performed audit work at three (2022: three) components: Group head office, Sunbelt
UK, and Sunbelt US. We also performed review procedures over the financial information of the fourth component, Sunbelt
Canada. This scoping is consistent with the previous year.
Significant
changes in our
approach
There were no significant changes in our audit approach in the current year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of
accounting included:
− obtaining an understanding of the relevant controls relating to the Group’s forecasting process;
− evaluating the mechanical accuracy of the model used to prepare the Group’s forecast;
− assessing the Group’s facility agreements and bond documentation to understand the principal terms and the related financial covenant;
and
Ashtead Group plc Annual Report & Accounts 2023
126
INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF ASHTEAD GROUP PLC
− challenging the appropriateness of forecast assumptions by:
• assessing key assumptions underpinning the Group’s forecasts with reference to external data such as GDP growth rates and market
forecast data from third party sources;
• considering the impact of the economic environment and the political landscape, including supply chain constraints on end markets and
the impact of climate change;
• assessing the likelihood of the assumptions in the forecasts and the impact of reasonably possible downside scenarios on the Group’s
funding position;
• assessing the extent of the downside required in order to trigger the fixed charge ratio covenant;
• comparing forecasts to historical financial information to assess management’s historical forecasting accuracy; and
• assessing capital commitments made by the Group as well as the mitigating actions available to the Group, the feasibility of these, and
the likelihood of positive impact in the next 12 months, if these actions are taken.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern for a period
of at least 12 months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
thisreport.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
5.1 Carrying value of rental fleet
Key audit
matter
description
As set out in Note 13, the Group holds $15,826m (2022: $13,539m) of rental equipment at cost ($9,649m net book value
(2022: $7,814m net book value)). These assets represent 52% (2022: 51%) of the Group’s gross assets. The movement in
the balance from prior year is due to a $3,673m increase in the balance from additions and acquisitions, offset in part by
disposals, depreciation and foreign exchange movements of $1,838m.
There is a risk that an impairment required to the Group’s rental equipment under IAS 36 Impairment of Assets is not
identified, properly quantified or recorded and that the carrying value of the rental equipment assets is therefore misstated.
The Group’s accounting policy as disclosed in Note 2 sets out that the assets are recorded at cost (including transportation
costs from the manufacturer to the initial rental location), less accumulated depreciation and any provisions for
impairment. The Group’s approach for estimating the useful lives and residual values is also explained.
As described in the Audit Committee report on page 97, management undertakes an annual review of the appropriateness
of the useful lives and residual values assigned to property, plant and equipment, including the rental equipment, and
assesses whether they continue to be appropriate. Additionally, when assessing the rental equipment for indicators of
impairment, management’s key judgements include the level of gains on disposal, utilisation, age of assets and second-
hand valuations.
Management’s assessment of carrying values is based on a long-term assessment, as at the balance sheet date, over the
economic cycle given the nature of the assets.
How the scope
of our audit
responded to
the key audit
matter
In responding to the identified key audit matter, we completed the following audit procedures:
− obtained an understanding of and tested controls over the impairment indicators review, and in particular, the
identification of impairment indicators;
− obtained and evaluated the assessment performed by management to identify impairment indicators, including the
consistency of these with the requirements of IAS 36 Impairment of Assets;
− challenged the key judgements underpinning the assessment and the impact that each of these has in determining
whether an impairment exists, including consideration of contradictory evidence. In particular, we focused our testing
on returns on investment by asset class, consideration of specific markets, rental equipment utilisation, residual values,
useful lives and profits recorded on asset disposals;
− considered and challenged the impact of the economic environment and the political landscape, including supply chain
constraints on second-hand markets and end markets, with corroboration to external data; and
− assessed whether the accounting for the rental equipment and associated disclosures are in line with the Group’s
accounting policies and IAS 36.
Key
observations
We consider that management’s consideration of carrying values, including useful lives and residual values, is appropriate
for the purposes of the impairment assessment. As a result of the audit work performed, we are satisfied that the carrying
value of the rental equipment is appropriate.
Ashtead Group plc Annual Report & Accounts 2023
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FINANCIAL STATEMENTS
5.2 Revenue recognition – manual topside intervention
Key audit
matter
description
As disclosed in the Group’s accounting policy note (Note 2), the Group has three main sources of revenue:
− rental revenue of $8,698m (2022: $7,235m), including loss damage waiver, environmental fees and revenue from rental
equipment delivery and collection;
− revenue from the sale of new equipment, merchandise and consumables of $342m (2022: $387m); and
− revenue from the sale of used rental equipment of $627m (2022: $340m).
In the ordinary course of business, management post recurring manual journal entries to revenue, such as to record
deferred and accrued revenue amounts at each period-end, rebates and discounts, or reclassifications. We identified a risk
of misstatement arising from management intervention, whether due to fraud or error, through non-recurring top-side
manual journals to revenue, given the high volume and scope for the gross amount of entries to be material. Through our
risk assessment procedures performed in the current period, no such material manual journals were identified in the UK
and therefore the Sunbelt US component, which represents 85% of the Group’s revenue, was the focus area of our testing.
How the scope
of our audit
responded to
the key audit
matter
In responding to the identified key audit matter, we completed the following audit procedures:
− obtained an understanding of and tested the relevant controls over the revenue cycle throughout the Group, with a
particular focus on those controls relating to manual journal entries, including the controls over classification of these
journals as manual;
− at Sunbelt US, performed a detailed assessment by store, analysing revenue trends to identify any outliers and instances
of potential management intervention with consideration of revenue recognised by profit centre compared to the level of
rental equipment on hand; and
− used data analytic techniques to identify a sub-population from manual top-side adjustments impacting the revenue
balance exhibiting characteristics of audit interest. We then performed testing on a sample basis of entries from this
sub-population, agreeing adjustments to supporting documentation in order to assess the accuracy and appropriateness
of the journal postings.
Key
observations
As a result of the procedures performed, we are satisfied that revenue recorded is appropriate.
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions
of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work
and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Company financial statements
Materiality
$83.0m (2022: $65.7m) £34.5m (2022: £24.8m)
Basis for
determining
materiality
In determining our materiality, we took a three-year average
profit before tax and applied a benchmark of 4.9% to arrive
at materiality. This approach is consistent with the approach
adopted in the prior year.
3% of the Company’s net assets capped at 50% of Group
materiality. This approach is consistent with the approach
adopted in the prior year.
Rationale for
the benchmark
applied
Profit before tax has been used as it is the primary measure
of performance used by the Group. We have used average
reported profit before tax over the past three years to
reflect the cyclical nature of the industry in which the
Groupoperates.
As the Company is a holding company, we consider net assets
to be the most appropriate benchmark due to the entity being
the shareholder of multiple trading entities. We have applied
a cap of 50% of the Group materiality to the benchmark.
6.2 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Company financial statements
Performance
materiality
70% (2022: 70%) of Group materiality 70% (2022: 70%) of Company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
− our cumulative knowledge of the Group, including the nature, quantum and volume of corrected and uncorrected
misstatements in prior periods; and
− our risk assessment, including our assessment of the Group’s overall control environment and that we consider it
appropriate to rely on controls over a number of business processes in Sunbelt US, which represents 85% of the Group
by revenue.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of $4.1m (2022: $3.3m), as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
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128
Independent Auditor’s report to the members of Ashtead Group plc continued
7. An overview of the scope of our audit
7.1
Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including group-wide controls, and
assessing the risks of material misstatement at the Group level. Audit work to respond to the risks of material misstatement consisted
of a combination of work performed by separate component teams in the UK and US as well as the Group audit team in the UK.
The Group comprises four (2022: four) principal components: the Head Office in the UK; Sunbelt UK; Sunbelt US; and Sunbelt Canada.
The Group audit team performed a full scope audit of the Head Office component; local component audit teams performed full-scope
audits for both Sunbelt UK and Sunbelt US and analytical review procedures over the financial information for Sunbelt Canada,
consistent with the prior year approach.
The three components for which we performed full audit procedures represent 94% (2022: 94%) of the Group’s revenue, 95% (2022:
95%) of the Group’s operating profit, and 89% (2022: 91%) of the Group’s net assets. They were also selected to provide an appropriate
basis for undertaking audit work to address the risks of material misstatements identified above. Our audit work at the three locations
was executed at levels of materiality applicable to each individual location, which were lower than Group materiality and ranged from
$29.1m to $52.3m (2022: $23.0m to $41.4m).
The Sunbelt US component team also performed an analytical review of the financial information of the operations in Sunbelt Canada,
which represents 6% (2022: 6%) of the Group’s revenue, 5% (2022: 5%) of the Group’s operating profit and 11% (2022: 9%) of the Group’s
net assets, using a component materiality level of $29.1m (2022: $23.0m).
7.2 Our consideration of the control environment
In line with our scoping of components (refer to section 7.1), our work in relation to the Group’s control environment focused on Sunbelt
US as the Group’s largest component and we evaluated both the business cycle controls and general IT controls (‘GITCs’).
In order to evaluate business cycle controls, we performed walkthrough procedures over key cycles in Sunbelt US, including the key
risk areas of revenue and property, plant and equipment (rental equipment), to understand whether the control was effectively
designed to address the related risk. We then performed testing of the controls across the audit period on a rotational basis, to
determine whether the controls had operated effectively as designed.
In relation to GITCs, for Sunbelt US we performed an independent risk assessment of the systems, applications and tools used to
support business processes and reporting to determine those which are of greatest relevance to the Group’s financial reporting. We
performed testing of GITCs of these systems, including through involvement of IT specialists, covering controls surrounding user
access management, change management and interfaces with other systems relating to in-scope IT systems as well as controls over
key reports generated from the IT systems and their supporting infrastructure (database and operating system).
Our procedures enabled us, as planned, to place reliance on business cycle controls and GITCs within Sunbelt US. We relied on these
controls in our audit testing across expenditure (including payroll), property, plant and equipment (rental equipment), revenue,
treasury, customer rebates and journal entries.
7.3 Our consideration of climate-related risks
Through the Group’s risk management process, it has assessed relevant climate-related risks for the entity. The risks identified
primarily related to the Group’s reliance on diesel engines and compliance with laws and governing environmental protection matters.
The risks are disclosed within the Task Force on Climate-related Financial Disclosures (“TCFD”) statement on pages 76 to 81 of the
Annual Report.
We obtained an understanding of management’s process for considering the impact of climate-related risks. We evaluated these risks
to assess whether they were complete and consistent with our understanding of the entity and our wider risk assessment procedures.
Our procedures to address the identified risks included considering their impact on the financial statements overall, including the
application of individual accounting standards. We have read the TCFD disclosures within the Annual Report to consider whether they
are materially consistent with the financial statements and our knowledge obtained in the audit. The Group identifies the risks and
opportunities related to climate-related matters as an assumption in the goodwill impairment review set out in Note 15. We assessed
this disclosure, including through the procedures performed over goodwill impairment and on the financial statement disclosures
as a whole.
7.4 Working with other auditors
Throughout the year, members of the Group audit team, including the lead audit partner, held group-wide and individual planning and
close meetings that covered all components. We supervised and directed our component teams, including discussing the audit work
performed. We also reviewed the audit workpapers supporting the component teams’ reporting to us remotely, using shared desktop
technology where appropriate. Members of the Group audit team, including the lead audit partner, also visited our US component
during the completion of the audit work to supervise work performed.
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129
FINANCIAL STATEMENTS
8. Other information
The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws
and regulations, we considered the following:
− the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
− results of our enquiries of management, internal audit, internal legal counsel and the Audit Committee about their own identification
and assessment of the risks of irregularities;
− any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
− the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including tax, valuations, pensions and IT specialists, regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in revenue recognition. In common with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of management override of controls.
We also obtained an understanding of the legal and regulatory frameworks within which the Group operates, focusing on provisions of
those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, the Listing Rules, pensions
legislation, and UK and overseas tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included UK and
North America Health and Safety legislation, and environmental laws regulating wastewater, stormwater, solid and hazardous wastes
and materials, including carbon emissions.
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130
Independent Auditor’s report to the members of Ashtead Group plc continued
11.2 Audit response to risks identified
As a result of performing the above, we identified revenue recognition – manual top-side intervention as a key audit matter related to
the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific
procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
− reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the financial statements;
− enquiring of management, the Group’s performance standards function (which is responsible for assessing store compliance with
operating policies), the Audit Committee and external and in-house legal counsel concerning actual and potential litigation and
claims;
− performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
− reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with
tax authorities; and
− in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including
internal specialists and significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws
and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
− the information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
− the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the
audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
− the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 123;
− the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 45;
− the directors’ statement on fair, balanced and understandable set out on page 100;
− the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 40 and 41;
− the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out
on page 96; and
− the section describing the work of the Audit Committee set out on pages 97 to 101.
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
− we have not received all the information and explanations we require for our audit; or
− adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
− the Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not
been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Ashtead Group plc Annual Report & Accounts 2023
131
FINANCIAL STATEMENTS
15. Other matters which we are required to address
15.1 Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Board of directors in 2004 to audit the financial
statements for the year ending 30 April 2004 and subsequent financial periods. The period of total uninterrupted engagement including
previous renewals and reappointments of the firm is 20 years, covering the years ending 30 April 2004 to 30 April 2023.
15.2 Consistency of the Audit Report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with
ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members as a body for our audit work, for this report, or for the opinions we
have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial
statements will form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National
Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report
provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the
ESEF RTS.
William Smith (Senior statutory auditor)
for and on behalf of Deloitte LLP
Statutory Auditor
London, UK
12 June 2023
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132
Independent Auditor’s report to the members of Ashtead Group plc continued
CONSOLIDATED INCOME STATEMENT
for the year ended 30 April 2023
Notes
2023 2022
Before
amortisation
$m
Amortisation
$m
Total
$m
Before
exceptional
items and
amortisation
$m
Exceptional
items and
amortisation
$m
Total
$m
Revenue
Rental revenue 8, 69 8 . 2 – 8 , 69 8 . 2 7, 2 3 4 . 7 – 7, 2 3 4 .7
Sale of new equipment, merchandise and
consumables 3 41 . 7 – 3 41 . 7 387.2 – 387.2
Sale of used rental equipment 6 2 7. 4 – 6 2 7. 4 3 4 0.4 – 3 4 0.4
9, 6 6 7. 3 – 9, 6 6 7. 3 7, 9 6 2 . 3 – 7, 9 6 2 . 3
Operating costs
Staff costs 4 (2,222.1) – (2,222.1) (1, 8 3 0 . 5) – (1, 8 3 0 . 5)
Other operating costs 4 (2 , 5 9 1 .1) – (2 , 5 9 1 .1) (2 , 2 6 0 .9) – (2 , 2 6 0 .9)
Used rental equipment sold 4 (4 4 2 .3) – (4 4 2 . 3) (2 61 . 5) – (2 61 . 5)
(5,255.5) – (5, 255.5) (4,352. 9) – (4,352 . 9)
EBITDA¹ 4 , 411 . 8 – 4 , 411. 8 3,609 .4 – 3,609 .4
Depreciation 4 (1, 7 7 2 .1) – (1 , 7 7 2 .1) (1, 5 5 3 . 0) – (1, 5 5 3 . 0)
Amortisation of intangibles 4, 5 – (11 7. 7) (117. 7) – (1 0 8 . 6) (10 8 . 6)
Operating profit 3, 4 2 , 6 3 9. 7 (11 7. 7) 2,522. 0 2,056.4 (10 8 . 6) 1,947. 8
Interest income 6 2.6 – 2.6 0 .1 – 0 .1
Interest expense 5, 6 (3 6 8 .8) – (3 6 8 . 8) (2 3 2 .7) (4 7.1) (279 .8)
Profit on ordinary activities before taxation 2 ,27 3.5 (11 7. 7) 2 ,1 5 5 . 8 1, 8 2 3 . 8 (15 5 .7) 1, 6 6 8 .1
Taxation 7, 21 (56 7 . 7) 2 9. 6 (5 3 8 .1) (4 5 6 .3) 3 9. 3 (41 7. 0)
Profit attributable to equity holders of the
Company 1,7 0 5 . 8 (8 8 .1) 1 , 6 17. 7 1, 3 67. 5 (11 6 . 4) 1, 2 51.1
Basic earnings per share 8 388 .5¢ (2 0 .1¢) 368.4¢ 3 0 7.1¢ (26.2¢) 2 8 0 .9¢
Diluted earnings per share 8 38 6.0¢ (19.9¢) 3 6 6 .1¢ 3 05.8¢ (2 6 .1¢) 2 7 9. 7¢
¹ EBITDA is presented here as an alternative performance measure as it is commonly used by investors and lenders. Further details are provided in the Glossary of terms
on page 174.
All revenue and profit for the year is generated from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 April 2023
Note
2023
$m
2022
$m
Profit attributable to equity holders of the Company for the financial year 1, 61 7. 7 1, 2 51.1
Items that will not be reclassified to profit or loss:
Movements on financial asset investments (3 6. 8) –
Remeasurement of the defined benefit pension plan 24 (2 .9) 11. 4
Tax on defined benefit pension plan 0 .7 (2 .7)
(3 9. 0) 8 .7
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences (19. 2) (9 2 .7)
Loss on cash flow hedge (3 .1) –
(22.3) (9 2 .7)
Total other comprehensive loss for the year (61 . 3) (8 4. 0)
Total comprehensive income for the year 1, 5 5 6 . 4 1 ,1 6 7.1
Ashtead Group plc Annual Report & Accounts 2023
133
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
at 30 April 2023
Notes
2023
$m
2022
$m
Current assets
Inventories 10 181. 3 16 8 . 5
Trade and other receivables 11 1 , 6 5 9. 2 1, 3 9 0 . 4
Current tax asset 14 . 6 7. 2
Cash and cash equivalents 12 2 9.9 15 . 3
1, 8 8 5 . 0 1, 5 8 1. 4
Non-current assets
Property, plant and equipment
– rental equipment 13 9, 6 4 9.1 7, 8 14 . 3
– other assets 13 1 ,392.0 1 ,078.3
11 , 0 41 .1 8,892.6
Right-of-use assets 14 2 ,2 06.0 1,8 6 4 . 8
Goodwill 15 2,8 65.5 2,30 0.0
Other intangible assets 15 523. 4 47 5 . 3
Other non-current assets 16 1 8 9.9 1 5 7. 5
Net defined benefit pension plan asset 24 18 . 4 18 . 5
16 , 8 4 4 . 3 13 ,7 0 8 .7
Total assets 18 , 7 2 9. 3 15 , 2 9 0 .1
Current liabilities
Trade and other payables 17 1 ,533.6 1,197.1
Current tax liability 12 . 4 20.2
Lease liabilities 18 233.2 18 8 . 6
Provisions 20 78.6 68.8
1 , 8 5 7. 8 1 , 474 . 7
Non-current liabilities
Lease liabilities 18 2 ,1 61 .1 1, 8 0 6 . 6
Long-term borrowings 19 6,595. 1 5 ,18 0 .1
Provisions 20 7 5 .9 68.0
Deferred tax liabilities 21 1,9 9 5 . 3 1, 69 5 . 4
Other non-current liabilities 3 6 .1 3 1. 6
1 0,863.5 8 , 7 8 1.7
Total liabilities 12 , 7 2 1 . 3 10 , 2 5 6 . 4
Equity
Share capital 22 81. 8 81. 8
Share premium account 6.5 6.5
Capital redemption reserve 20.0 20.0
Own shares held by the Company 22 (74 0 .9) (4 8 0 .1)
Own shares held by the ESOT 22 (3 8 . 8) (4 4 .9)
Cumulative foreign exchange translation differences (2 4 5 .9) (2 2 6 .7)
Retained reserves 6, 925.3 5 , 67 7.1
Equity attributable to equity holders of the Company 6,008 .0 5, 0 3 3 .7
Total liabilities and equity 18 , 7 2 9. 3 15 , 2 9 0 .1
These financial statements were approved by the Board on 12 June 2023.
Brendan Horgan Michael Pratt
Chief executive Chief financial officer
Ashtead Group plc Annual Report & Accounts 2023
134
Consolidated financial statements continued
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 April 2023
Share
capital
$m
Share
premium
account
$m
Capital
redemption
reserve
$m
Own
shares
held by
the
Company
$m
Own
shares
held
by
the ESOT
$m
Cumulative
foreign
exchange
translation
differences
$m
Retained
reserves
$m
Total
$m
At 1 May 2021 81. 8 6.5 2 0.0 (66 . 2) (3 6.8) (13 4 . 0) 4, 654.2 4,525.5
Profit for the year – – – – – – 1, 2 51.1 1,2 51.1
Other comprehensive income:
Foreign currency translation differences – – – – – (9 2 .7) – (9 2 .7)
Remeasurement of the defined benefit
pension plan – – – – – – 11 . 4 11 . 4
Tax on defined benefit pension plan – – – – – – (2 .7) (2 .7)
Total comprehensive income for the year – – – – – (9 2 .7) 1 ,259 .8 1,1 6 7.1
Dividends paid – – – – – – (2 7 1. 5) (2 7 1. 5)
Own shares purchased by the ESOT – – – – (2 3.8) – – (23.8)
Own shares purchased by the Company – – – (41 3 .9) – – – (413 . 9)
Share-based payments – – – – 15 . 7 – 3 2.4 4 8 .1
Tax on share-based payments – – – – – – 2.2 2.2
At 30 April 2022 81. 8 6.5 20.0 (4 8 0 .1) (4 4 .9) (2 2 6 .7) 5 , 6 7 7.1 5 , 0 3 3 .7
Profit for the year – – – – – – 1 , 61 7. 7 1 , 61 7. 7
Other comprehensive income:
Movement on financial asset investments – – – – – – (3 6. 8) (3 6. 8)
Foreign currency translation differences – – – – – (19. 2) – (19. 2)
Loss on cash flow hedge – – – – – – (3 .1) (3 .1)
Remeasurement of the defined benefit
pension plan – – – – – – (2 .9) (2 .9)
Tax on defined benefit pension scheme – – – – – – 0 .7 0 .7
Total comprehensive income for the year – – – – – (19. 2) 1 ,575.6 1, 5 5 6 . 4
Dividends paid – – – – – – (3 5 6. 6) (35 6 .6)
Own shares purchased by the ESOT – – – – (12 . 5) – – (12 . 5)
Own shares purchased by the Company – – – (26 0. 8) – – – (260. 8)
Share-based payments – – – – 18 . 6 – 26. 2 4 4.8
Tax on share-based payments – – – – – – 3.0 3.0
At 30 April 2023 8 1. 8 6.5 20.0 (74 0 .9) (3 8 . 8) (2 4 5 .9) 6,925.3 6,0 08.0
Ashtead Group plc Annual Report & Accounts 2023
135
FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 April 2023
Notes
2023
$m
2022
$m
Cash flows from operating activities
Cash generated from operations before changes in rental equipment 26(a) 4,0 73.6 3,4 06.5
Payments for rental property, plant and equipment (3,0 1 9 .6) (1,76 5 . 4)
Proceeds from disposal of rental property, plant and equipment 573.6 34 3.8
Cash generated from operations 1 , 6 2 7. 6 1,9 8 4 .9
Financing costs paid (net) (3 4 0. 2) (2 3 1 .1)
Exceptional financing costs paid – (3 6.0)
Tax paid (net) (2 8 7. 3) (2 18 . 8)
Net cash generated from operating activities 1,000. 1 1, 49 9. 0
Cash flows from investing activities
Acquisition of businesses 26(b) (1 , 0 8 3 . 2) (1, 2 7 7. 4)
Financial asset investments 25 (4 2 . 4) (4 0 .0)
Payments for non-rental property, plant and equipment (510 . 0) (3 98. 4)
Proceeds from disposal of non-rental property, plant and equipment 41 . 4 24.8
Net cash used in investing activities (1, 5 9 4 . 2) (1, 69 1. 0)
Cash flows from financing activities
Drawdown of loans 3,355.0 3,0 5 4.5
Redemption of loans (2 , 0 0 1. 5) (2,062. 7)
Repayment of principal under lease liabilities 18 (10 9. 5) (1 0 7. 6)
Dividends paid 9 (3 5 7. 8) (2 6 9. 3)
Purchase of own shares by the ESOT (12 . 5) (23. 8)
Purchase of own shares by the Company (2 64.4) (4 0 9. 6)
Net cash generated from financing activities 609 .3 1 81. 5
Increase/(decrease) in cash and cash equivalents 15 . 2 (10 . 5)
Opening cash and cash equivalents 15 . 3 26.6
Effect of exchange rate differences (0 .6) (0. 8)
Closing cash and cash equivalents 12 2 9.9 15 . 3
Notes
2023
$m
2022
$m
Reconciliation of net cash flows to net debt
(Increase)/decrease in cash and cash equivalents in the year (15 . 2) 10 . 5
Increase in debt through cash flow 1, 2 4 4 . 0 88 4.2
Change in net debt from cash flows 1 ,228.8 8 94 .7
Exchange differences (3 7. 8) (4 7.1)
Debt acquired 27 2 2 7. 9 131. 7
Deferred costs of debt raising 7. 2 18 . 0
New lease liabilities 373.4 3 62.0
Increase in net debt in the year 1, 7 9 9. 5 1 ,359 .3
Net debt at 1 May 7,1 6 0 . 0 5 , 8 0 0 .7
Net debt at 30 April 26(c) 8,959 .5 7,16 0 . 0
Ashtead Group plc Annual Report & Accounts 2023
136
Consolidated financial statements continued
1 General information
Ashtead Group plc (‘the Company’) is a company incorporated and
domiciled in England and Wales and listed on the London Stock
Exchange. The consolidated financial statements are presented in
US dollars.
2 Accounting policies
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been applied consistently to all the years presented, unless
otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance
with United Kingdom adopted International Financial Reporting
Standards (‘IFRS’) and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost
convention, modified for certain items carried at fair value, as
stated in the accounting policies.
In preparing these financial statements, the exchange rates used
in respect of the pound sterling (£) and Canadian dollar (C$) are:
Pound sterling Canadian dollar
2023 2022 2023 2022
Average for the year
ended 30 April 1.20 1.36 0.75 0.80
At 30 April 1.26 1.26 0.74 0.78
The consolidated financial statements have been prepared on the
going concern basis. The Group’s internal budgets and forecasts
of future performance, available financing facilities and facility
headroom (see Note 19), provide a reasonable expectation that
the Group has adequate resources to continue in operation for the
foreseeable future and consequently the going concern basis
continues to be appropriate in preparing the consolidated
financial statements.
Key judgements and estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make judgements, estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amount of revenue and
expenses during the reporting period.
In the course of preparing the financial statements, no
judgements have been made in the process of applying the
Group’s accounting policies, other than those involving
estimations, that have had a significant effect on the amounts
recognised within the financial statements.
The estimates and associated assumptions which have been used
are based on historical experience and other factors that are
considered to be relevant. While actual results could differ from
these estimates, the Group has not identified any assumptions, or
other key sources of estimation uncertainty in the reporting
period that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year.
Changes in accounting policies and disclosures
New and amended standards adopted by the Group
There are no new IFRS or IFRIC Interpretations that are effective
for the first time this financial year which have a material impact
on the Group.
New standards, amendments and interpretations issued but
not effective for the financial year beginning 1 May 2022 and
not adopted early
There are no IFRS or IFRIC Interpretations that are not yet
effective that would be expected to have a material impact on
the Group.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 30 April each year. Control
is achieved when the Company has the power over the investee,
is exposed, or has rights, to variable returns from its involvement
with the investee, and has the ability to use its power to affect its
returns. The Company reassesses whether or not it controls
an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control
listed above.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, the results of subsidiaries
acquired or disposed of during the year are included in the
consolidated income statement from the date the Company
gains control until the date when the Company ceases to control
the subsidiary.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and
cash flows relating to transactions between the members of the
Group are eliminated on consolidation.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration transferred in a
business combination is the fair value at the acquisition date of
the assets transferred and the liabilities incurred by the Group
and includes the fair value of any contingent consideration
arrangement. Acquisition-related costs are recognised in the
income statement as incurred.
Contingent consideration is measured at the acquisition date at
fair value and included in provisions in the balance sheet.
Changes in the fair value of contingent consideration due to
events post the date of acquisition are recognised in the income
statement. Cash flow payments to settle contingent consideration
are reflected in investing activities.
Foreign exchange
Foreign currency transactions
Foreign currency transactions are translated into the functional
currency of the entity that has undertaken the transaction using
the exchange rates ruling on the dates of the transaction. At each
reporting date, monetary assets and liabilities that are
denominated in foreign currencies are translated at the rates
prevailing on the reporting date. All currency translation
differences are taken to the income statement. The functional
currency of the parent company is pounds sterling.
Ashtead Group plc Annual Report & Accounts 2023
137
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
2 Accounting policies (continued)
Translation of overseas operations
The reporting currency of the Group is the US dollar, the currency
in which the majority of our assets, liabilities, revenue and costs
are denominated. Assets and liabilities in non-US dollar
denominated currencies are translated into US dollars at rates of
exchange ruling at the balance sheet date. Income statements
and cash flows of non-US dollar denominated subsidiary
undertakings are translated into US dollars at average rates of
exchange for the year.
Exchange differences arising from the retranslation of the
opening net investment of non-US dollar denominated
subsidiaries and the difference between the inclusion of their
profits at average rates of exchange in the Group income
statement and the closing rate used for the balance sheet are
recognised directly in a separate component of equity.
Revenue
Revenue is measured based on the consideration specified in a
contract with a customer and excludes amounts collected on
behalf of third parties and VAT/sales tax. Our revenue is a function
of our rental rates and the size, utilisation and mix of our rental
equipment. The Group has three main sources of revenue as
detailed below:
− rental revenue, including loss damage waiver, environmental
fees and revenue from rental equipment delivery and
collection;
− revenue from the sale of new equipment, merchandise and
consumables; and
− revenue from the sale of used rental equipment.
Rental revenue, including loss damage waiver and environmental
fees, is recognised on a straight-line basis over the period of the
rental contract. In general, rental contracts have no fixed
duration and are cancellable at any time. However, as a rental
contract can extend across financial reporting period ends, the
Group records accrued revenue (unbilled rental revenue) and
deferred revenue at the beginning and end of each reporting
period so that rental revenue is appropriately stated in the
financial statements. Revenue from rental delivery and collection
is recognised when the delivery or collection has occurred and
the performance obligation therefore fulfilled.
Revenue from the sale of new rental equipment, merchandise
and consumables, together with revenue from the sale of used
rental equipment, is recognised at the time of delivery to, or
collection by, the customer and when all performance obligations
under the sale contract have been fulfilled.
Revenue from the sale of rental equipment in connection with
trade-in arrangements with certain manufacturers from whom
the Group purchases new equipment is accounted for at the lower
of transaction value or fair value based on independent
appraisals. If the trade-in price of a unit of equipment exceeds the
fair market value of that unit, the excess is accounted for as a
reduction of the cost of the related purchase of new rental
equipment.
Of the Group’s rental revenue, $7,264m (2022: $6,147m) is
accounted for in accordance with IFRS 16, ‘Leases’, while revenue
from other ancillary services, each of which is billed separately,
revenue from the sale of new equipment, merchandise and
consumables and revenue from the sale of used equipment
totalling $2,403m (2022: $1,815m) is accounted for in accordance
with IFRS 15, ‘Revenue from Contracts with Customers’.
Interest income and expense
Interest income comprises interest receivable on funds invested
and net interest on net defined benefit pension plan assets.
Interest expense comprises interest payable on borrowings and
lease liabilities, amortisation of deferred debt raising costs, the
unwind of the discount on the self-insurance and contingent
consideration provisions and the net interest on net defined
benefit pension plan liabilities.
Exceptional items
Exceptional items are those items of income or expense which the
directors believe should be disclosed separately by virtue of their
significant size or nature and limited predictive value to enable a
better understanding of the Group’s financial performance.
Earnings per share
Earnings per share is calculated based on the profit for the
financial year and the weighted average number of ordinary
shares in issue during the year. For this purpose the number of
ordinary shares in issue excludes shares held by the Company or
by the Employee Share Ownership Trust in respect of which
dividends have been waived. Diluted earnings per share is
calculated using the profit for the financial year and the weighted
average diluted number of shares (ignoring any potential issue of
ordinary shares which would be anti-dilutive) during the year.
Adjusted earnings per share comprises basic earnings per share
adjusted to exclude earnings relating to exceptional items and
amortisation of intangibles.
Current/non-current distinction
Current assets include assets held primarily for trading
purposes, cash and cash equivalents and assets expected to be
realised in, or intended for sale or consumption in, the course of
the Group’s operating cycle and those assets expected to be
realised within one year from the reporting date. All other assets
are classified as non-current assets.
Current liabilities include liabilities held primarily for trading
purposes, liabilities expected to be settled in the course of the
Group’s operating cycle and those liabilities due within one year
from the reporting date. All other liabilities are classified as
non-current liabilities.
Property, plant and equipment
Property, plant and equipment is stated at cost (including
transportation costs from the manufacturer to the initial rental
location) less accumulated depreciation and any provisions for
impairment. In respect of certain assets, cost includes rebuild
costs when the rebuild extends the asset’s useful economic life
and it is probable that incremental economic benefits will accrue
to the Group. Rebuild costs include the cost of transporting the
equipment to and from the rebuild supplier. Depreciation is not
charged while the asset is not in use during the rebuild period.
Ashtead Group plc Annual Report & Accounts 2023
138
Notes to the consolidated financial statements continued
Depreciation
Property, plant and equipment is depreciated on a straight-line
basis applied to the opening cost to write down each asset to its
residual value over its useful economic life. Estimates of useful
life and residual value are determined with the objective of
allocating most appropriately the cost of property, plant and
equipment to our income statement, over the period we anticipate
it will be used in our business. Residual values and estimated
useful economic lives are reassessed annually, recognising the
cyclical nature of the business, by making reference to recent
experience of the Group. The depreciation rates in use are as
follows:
Per annum
Freehold property 2%
Motor vehicles 7% to 25%
Rental equipment 4% to 33%
Office and workshop equipment 20%
Residual values are estimated at 10 to 15% of cost in respect of
most types of rental equipment, although the range of residual
values used varies between zero and 35%.
Repairs and maintenance
Costs incurred in the repair and maintenance of rental and other
equipment are charged to the income statement as incurred.
Intangible assets
Goodwill
Goodwill represents the difference between the fair value of the
consideration for an acquisition and the fair value of the net
identifiable assets acquired, including any intangible assets other
than goodwill.
Goodwill is stated at cost less any accumulated impairment
losses and is allocated to each of the Group’s cash-generating
units expected to benefit from the synergies of the combination.
The profit or loss on the disposal of a previously acquired
business includes the attributable amount of any purchased
goodwill relating to that business.
Other intangible assets
Other intangible assets acquired as part of a business
combination are capitalised at fair value as at the date of
acquisition. Internally generated intangible assets are not
capitalised. Amortisation is charged on a straight-line basis over
the expected useful life of each asset. Contract-related intangible
assets are amortised over the life of the contract. Amortisation
rates for other intangible assets are as follows:
Per annum
Brand names 7% to 100%
Customer lists 7% to 50%
Contract related 14% to 50%
Impairment of assets
Goodwill is not amortised but is tested annually for impairment as
at 30 April each year. Assets that are subject to amortisation or
depreciation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised in the
income statement for the amount by which the asset’s carrying
amount exceeds its recoverable amount. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable and independent cash
flows for the asset being tested for impairment (cash-generating
unit).
The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value in use. In assessing value in use,
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset.
In respect of assets other than goodwill, an impairment loss is
reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment
loss had been recognised. Impairment losses in respect of
goodwill are not reversed.
Taxation
The tax charge for the period comprises both current and
deferred tax. Taxation is recognised in the income statement
except to the extent that it relates to items recognised directly in
equity, in which case the related tax is also recognised in equity.
Current tax is the expected tax payable on the taxable income for
the year and any adjustment to tax payable in respect of previous
years. The Group’s liability for current tax is calculated using tax
rates applicable for the reporting period.
Deferred tax is provided using the balance sheet liability method
on any temporary differences between the carrying amounts for
financial reporting purposes and those for taxation purposes.
Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
differences arise from the initial recognition of goodwill.
Deferred tax is not recognised for temporary differences arising
on investments in subsidiaries where the Group is able to control
the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised, based on tax laws and rates that have been enacted or
substantively enacted at the reporting date. Deferred tax assets
and liabilities are offset when they relate to income taxes levied
by the same taxation authority, the Group intends to settle them
on a net basis and there is a legally enforceable right to offset tax
assets against tax liabilities.
Ashtead Group plc Annual Report & Accounts 2023
139
FINANCIAL STATEMENTS
2 Accounting policies (continued)
Inventories
Inventories, which comprise equipment, fuel, merchandise and
spare parts, are valued at the lower of cost and net realisable
value. The cost of inventory that is not ordinarily interchangeable
is valued at individual cost. The cost of other inventories is
determined on a first-in, first-out basis or using a weighted
average cost formula, depending on the basis most suited to the
type of inventory held.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial asset investments
The Group makes an election on initial recognition whether to
designate financial asset investments in equity instruments,
other than those held for trading, to be measured at fair value
through other comprehensive income. Financial asset
investments that do not meet this criteria are measured at fair
value through profit or loss.
Given the nature of the Group’s limited targeted investments in
start-up and early-stage companies, it can be difficult to
determine fair value. The directors consider that the most
appropriate approach to fair value is to use a valuation technique
based on market data, such as a valuation based on a recent
investment or funding round.
Trade receivables
Trade receivables do not carry interest and are initially
recognised at their transaction value and measured subsequently
at amortised cost using the effective interest method as reduced
by appropriate loss allowances for estimated irrecoverable
amounts. The loss allowances are calculated using the simplified
expected credit loss approach, based on prior experience
reflecting the level of uncollected receivables over the last year
within each business adjusted for factors that are specific to the
receivables, the industry in which we operate and the economic
environment. Adjustments to the loss allowances are recognised
in the income statement. Trade receivables are written off when
recoverability is assessed as being remote while subsequent
recoveries of amounts previously written off are credited to the
income statement.
Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call
deposits with maturity of less than, or equal to, three months.
Financial liabilities and equity
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received, net of direct issue costs.
Trade payables
Trade payables are not interest bearing and are stated at fair
value and subsequently measured at amortised cost using the
effective interest rate method.
Borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received. The direct transaction costs related to
arranging our senior secured credit facility are recognised
separately from the financial liability as a loan commitment asset.
Finance charges, including amortisation of direct transaction
costs, are charged to the income statement using the effective
interest rate method.
Borrowings exclude accrued interest which is classified as a
current liability and included within trade and other payables in
the balance sheet.
Tranches of borrowings and overdrafts which mature on a
regular basis are classified as current or non-current liabilities
based on the maturity of the facility so long as the committed
facility exceeds the drawn debt.
Net debt
Net debt consists of total borrowings and lease liabilities less
cash and cash equivalents. Non-US dollar denominated balances
are retranslated to US dollars at rates of exchange ruling at the
balance sheet date.
Senior notes
The Group’s senior notes contain early repayment options, which
constitute embedded derivatives in accordance with IFRS 9,
Financial Instruments. The accounting for these early repayment
options depends on whether they are considered to be closely
related to the host contract or not based on IFRS 9. Where they
are closely related, the early repayment option is not accounted
for separately and the notes are recorded within borrowings, net
of direct transaction costs. The interest expense is calculated by
applying the effective interest rate method.
In circumstances where the early repayment option is not
considered closely related to the host contract, the repayment
option has to be valued separately. At the date of issue the liability
component of the notes is estimated using prevailing market
interest rates for similar debt with no repayment option and is
recorded within borrowings, net of direct transaction costs. The
difference between the proceeds of the note issue and the fair
value assigned to the liability component, representing the
embedded option to prepay the notes is included within Other
financial assets – derivatives. The interest expense on the liability
component is calculated by applying the effective interest rate
method. The embedded option to prepay is fair valued using an
appropriate valuation model and fair value remeasurement gains
and losses are included in investment income and interest
expense respectively.
Where the Group’s senior notes are issued at a premium or
a discount, they are initially recognised at their face value plus
or minus the premium or discount. The notes are subsequently
measured at amortised cost using the effective interest
rate method.
Leases
The Group assesses whether a contract is a lease, or contains a
lease, at inception of the contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect
to all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of 12
months or less) and leases of low value assets. For these leases,
the Group recognises the lease payments as an operating expense
on a straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
Ashtead Group plc Annual Report & Accounts 2023
140
Notes to the consolidated financial statements continued
The lease liability is measured initially at the present value of
future lease payments at the commencement date, discounted by
using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the Group’s
lease liability comprise:
− fixed lease payments, less any lease incentives received; and
− variable lease payments that depend on an index or rate,
initially measured using the index or rate at the
commencement date.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to
reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
− the lease term changes, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate;
− the lease payments change due to changes in an index or rate,
in which case the lease liability is remeasured by discounting
the revised lease payments using the initial discount rate
(unless the lease payments change is due to a change in a
floating interest rate, in which case a revised discount rate is
used); or
− a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The right-of-use asset comprises the initial measurement of the
corresponding lease liability, lease payments made at or before
the commencement date and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated over the shorter period
of the lease term and the useful life of the underlying asset
with depreciation commencing at the commencement date
of the lease.
Variable lease payments that do not depend on an index or rate
are not included in the measurement of the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in the line ‘Other
operating costs’ in the income statement.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the directors’ best estimate of the expenditure
required to settle the obligation at the balance sheet date and are
discounted to present value where the effect is material.
Insurance
Insurance costs include insurance premiums which are written
off to the income statement over the period to which they relate
and an estimate of the discounted liability for uninsured retained
risks on unpaid claims incurred up to the balance sheet date. The
estimate includes events incurred but not reported at the balance
sheet date. This estimate is discounted and included in provisions
in the balance sheet on a gross basis with a corresponding
insurance receivable amount recognised as an asset where it is
virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Employee benefits
Defined contribution pension plans
Obligations under the Group’s defined contribution plans are
recognised as an expense in the income statement as incurred.
Defined benefit pension plans
The Group’s obligation in respect of defined benefit pension plans
is calculated by estimating the amount of future benefit that
employees have earned in return for their service in prior periods;
that benefit is discounted to determine its present value and the
fair value of plan assets is deducted. The discount rate used is the
yield at the balance sheet date on AA-rated corporate bonds. The
calculation is performed by a qualified actuary using the
projected unit credit method.
Actuarial gains and losses are recognised in full in the period in
which they arise through the statement of comprehensive income.
Net interest is calculated by applying a discount rate to the net
defined benefit pension plan asset or liability. The net interest
income or net interest expense is included in investment income
or interest expense, respectively.
The defined pension surplus or deficit represents the fair value of
the plan assets less the present value of the defined benefit
obligation. A surplus is recognised in the balance sheet to the
extent that the Group has an unconditional right to the surplus,
either through a refund or reduction in future contributions. A
deficit is recognised in full.
Share-based compensation
The fair value of awards made under share-based compensation
plans is measured at grant date and spread over the vesting
period through the income statement with a corresponding
increase in equity. The fair value of share options and awards is
measured using an appropriate valuation model taking into
account the terms and conditions of the individual award. The
amount recognised as an expense is adjusted to reflect the actual
awards vesting except where any change in the awards vesting
relates only to market-based criteria not being achieved.
Employee Share Ownership Trust
Shares in the Company acquired by the Employee Share
Ownership Trust (‘ESOT’) in the open market for use in connection
with employee share plans are presented as a deduction from
shareholders’ funds. When the shares vest to satisfy share-based
payments, a transfer is made from own shares held through the
ESOT to retained earnings.
Own shares held by the Company
The cost of own shares held by the Company is deducted from
shareholders’ funds. The proceeds from the reissue of own
shares are added to shareholders’ funds with any gains in excess
of the average cost of the shares being recognised in the share
premium account.
Ashtead Group plc Annual Report & Accounts 2023
141
FINANCIAL STATEMENTS
3 Segmental analysis
Segmental analysis by reportable operating segment
The Group operates one class of business: rental of equipment. Operationally, the Group is split into three business units, US, UK and
Canada which report separately to, and are managed by, the chief executive and align with the geographies in which they operate.
Accordingly, the Group’s reportable operating segments are the US, UK and Canada.
The Group manages debt and taxation centrally, rather than by business unit. Accordingly, segmental results are stated before interest
and taxation which are reported as central Group items. This is consistent with the way the chief executive reviews the business.
There are no material sales between the business segments. Segment assets include property, plant and equipment, right-of-use
assets, goodwill, intangibles, other non-current assets, net defined benefit pension asset, inventory and receivables. Segment
liabilities comprise operating liabilities and exclude taxation balances, corporate borrowings and accrued interest. Capital expenditure
represents additions to property, plant and equipment and intangible assets, including goodwill, and includes additions through the
acquisition of businesses.
Year ended 30 April 2023
US
$m
UK
$m
Canada
$m
Corporate
items
$m
Group
$m
Revenue
Rental revenue 7,502.6 671.8 523.8 – 8,698.2
Sale of new equipment, merchandise and consumables 186.1 89.4 66.2 – 341.7
Sale of used rental equipment 533.7 61.6 32.1 – 627.4
8,222.4 822.8 622.1 – 9,667.3
EBITDA 3,955.3 231.0 253.5 (28.0) 4,411.8
Depreciation (1,490.6) (152.9) (127.6) (1.0) (1,772.1)
Segment result 2,464.7 78.1 125.9 (29.0) 2,639.7
Amortisation (117.7)
Net financing costs (366.2)
Profit before taxation 2,155.8
Taxation (538.1)
Profit attributable to equity shareholders 1,617.7
Segment assets 15,637.5 1,427.8 1,567.3 52.2 18,684.8
Cash 29.9
Taxation assets 14.6
Total assets 18,729.3
Segment liabilities 3,382.1 276.0 380.2 19.4 4,057.7
Corporate borrowings and accrued interest 6,655.9
Taxation liabilities 2,007.7
Total liabilities 12,721.3
Other non-cash expenditure – share-based payments 32.5 3.1 2.2 7.0 44.8
Capital expenditure 4,062.7 413.7 496.4 – 4,972.8
Ashtead Group plc Annual Report & Accounts 2023
142
Notes to the consolidated financial statements continued
Year ended 30 April 2022
US
$m
UK
$m
Canada
$m
Corporate
items
$m
Group
$m
Revenue
Rental revenue 6,041.9 739.0 453.8 – 7,234.7
Sale of new equipment, merchandise and consumables 155.0 202.2 30.0 – 387.2
Sale of used rental equipment 280.1 45.1 15.2 – 340.4
6,477.0 986.3 499.0 – 7,962.3
EBITDA 3,120.6 291.7 224.3 (27.2) 3,609.4
Depreciation (1,268.3) (173.7) (109.9) (1.1) (1,553.0)
Segment result 1,852.3 118.0 114.4 (28.3) 2,056.4
Amortisation (108.6)
Exceptional items (47.1)
Net financing costs (232.6)
Profit before taxation 1,668.1
Taxation (417.0)
Profit attributable to equity shareholders 1,251.1
Segment assets 12,839.6 1,162.3 1,212.7 53.0 15,267.6
Cash 15.3
Taxation assets 7.2
Total assets 15,290.1
Segment liabilities 2,738.1 251.3 312.6 20.8 3,322.8
Corporate borrowings and accrued interest 5,218.0
Taxation liabilities 1,715.6
Total liabilities 10,256.4
Other non-cash expenditure – share-based payments 34.2 4.5 2.4 7.0 48.1
Capital expenditure 3,146.1 260.0 201.8 – 3,607.9
Segmental analysis by geography
The Group’s operations are located in the United States, the United Kingdom and Canada. The following table provides an analysis of
the Group’s revenue, segment assets and capital expenditure, including expenditure on acquisitions, by country of domicile. Segment
assets by geography include property, plant and equipment, goodwill, intangible assets, right-of-use assets and other non-current
assets (excluding financial asset investments), but exclude the net defined benefit pension plan asset, inventory, receivables, and
financial asset investments.
Revenue Segment assets Capital expenditure
2023
$m
2022
$m
2023
$m
2022
$m
2023
$m
2022
$m
United States 8,222.4 6,477.0 14,085.2 11,564.7 4,062.7 3,146.1
United Kingdom 822.8 986.3 1,257.8 1,005.9 413.7 260.0
Canada 622.1 499.0 1,441.6 1,119.6 496.4 201.8
9,667.3 7,962.3 16,784.6 13,690.2 4,972.8 3,607.9
Ashtead Group plc Annual Report & Accounts 2023
143
FINANCIAL STATEMENTS
4 Operating costs and other income
2023 2022
Before
amortisation
$m
Amortisation
$m
Total
$m
Before
amortisation
$m
Amortisation
$m
Total
$m
Staff costs:
Salaries
2,026.0 – 2,026.0 1,668.8 – 1,668.8
Social security costs 155.9 – 155.9 127.1 – 127.1
Other pension costs 40.2 – 40.2 34.6 – 34.6
2,222.1 – 2,222.1 1,830.5 – 1,830.5
Other operating costs:
Vehicle costs 620.3 – 620.3 510.1 – 510.1
Spares, consumables and external repairs 488.8 – 488.8 431.7 – 431.7
Facility costs 112.3 – 112.3 82.1 – 82.1
Other external charges 1,369.7 – 1,369.7 1,237.0 – 1,237.0
2,591.1 – 2,591.1 2,260.9 – 2,260.9
Used rental equipment sold 442.3 – 442.3 261.5 – 261.5
Depreciation and amortisation:
Depreciation of tangible assets
1,600.5 – 1,600.5 1,398.9 – 1,398.9
Depreciation of right-of-use assets 171.6 – 171.6 154.1 – 154.1
Amortisation of intangibles – 117.7 117.7 – 108.6 108.6
1,772.1 117.7 1,889.8 1,553.0 108.6 1,661.6
7,027.6 117.7 7,145.3 5,905.9 108.6 6,014.5
Proceeds from the disposal of non-rental property, plant and equipment amounted to $40m (2022: $26m), resulting in a profit on
disposal of $19m (2022: $9m) which is included in other external charges.
The costs shown in the above table include:
2023
$m
2022
$m
Cost of inventories recognised as expense 826.5 644.3
Net charge of allowance on trade receivables 47.3 31.2
Staff costs include remuneration of key management personnel, which comprise non-executive and executive directors.
Key management personnel remuneration comprised:
2023
$’000
2022
$’000
Salaries and short-term employee benefits 7,825 5,730
Post-employment benefits 23 20
National insurance and social security 804 376
Share-based payments 4,632 3,993
13,284 10,119
The Schedule 5 requirements of the Accounting Regulations for directors’ remuneration are included within the Directors’
remuneration report on pages 103 to 121.
Ashtead Group plc Annual Report & Accounts 2023
144
Notes to the consolidated financial statements continued
Remuneration payable to the Company’s auditor, Deloitte LLP, in the year is given below:
2023
$’000
2022
$’000
Fees payable to Deloitte UK and its associates for the audit of the Group’s annual accounts 1,543 1,465
Fees payable to Deloitte UK and its associates for other services to the Group:
– the audit of the Group’s UK subsidiaries pursuant to legislation 29 29
– audit-related assurance services 108 109
– other assurance services 238 123
1,918 1,726
Fees paid for audit-related assurance services relate to the review of the Group’s half-year interim financial statements. Other
assurance services relate to comfort letters provided in connection with the senior notes issued in August 2022 and January 2023.
5 Exceptional items and amortisation
2023
$m
2022
$m
Amortisation of intangibles 117.7 108.6
Write-off of deferred financing costs – 11.1
Early redemption fee – 36.0
Taxation (29.6) (39.3)
88.1 116.4
In the prior year, the costs associated with the redemption of the $600m 4.125% senior notes and the $600m 5.250% senior notes in
August 2021 were classified as exceptional items. The write-off of deferred financing costs consisted of the unamortised balance of the
costs relating to the notes. In addition, an early redemption fee of $36m was paid to redeem the notes prior to their scheduled maturity.
Of these items, total cash costs were $36m.
The items detailed in the table above are presented in the income statement as follows:
2023
$m
2022
$m
Amortisation of intangibles 117.7 108.6
Charged in arriving at operating profit 117.7 108.6
Interest expense – 47.1
Charged in arriving at profit before taxation 117.7 155.7
Taxation (29.6) (39.3)
88.1 116.4
6 Net financing costs
2023
$m
2022
$m
Interest income:
Net income on the defined benefit pension plan asset 0.6 0.1
Other income 2.0 –
Total interest income 2.6 0.1
Interest expense:
Bank interest payable 116.7 32.8
Interest payable on senior notes 142.8 111.2
Interest payable on lease liabilities 100.9 80.7
Non-cash unwind of discount on provisions 1.2 1.1
Amortisation of deferred debt raising costs 7.2 6.9
Total interest expense 368.8 232.7
Net financing costs before exceptional items 366.2 232.6
Exceptional items – 47.1
Net financing costs 366.2 279.7
Ashtead Group plc Annual Report & Accounts 2023
145
FINANCIAL STATEMENTS
7 Taxation
The tax charge for the year has been computed using the tax rates in force for the year ending 30 April 2023 of 25% in the US (2022:
25%), 19% in the UK, rising to 25% from 1 April 2023 (2022: 19%) and 26% in Canada (2022: 26%). This results in a blended effective rate
for the Group as a whole of 25% (2022: 25%) for the year. The Group’s future effective tax rate will depend on the mix of profits amongst
the territories in which it operates and their respective tax rates.
2023
$m
2022
$m
Analysis of the tax charge
Current tax
– current tax on income for the year 282.6 243.5
– adjustments to prior year (7.6) 6.7
275.0 250.2
Deferred tax
– origination and reversal of temporary differences 261.3 170.3
– adjustments due to change in UK corporate tax rate – 9.6
– adjustments to prior year 1.8 (13.1)
263.1 166.8
Total taxation charge 538.1 417.0
Comprising:
– United Kingdom 25.3 41.8
– United States 499.5 357.4
– Canada 13.3 17.8
538.1 417.0
The tax charge comprises a charge of $568m (2022: $456m) relating to tax on the profit before amortisation of $2,273m (2022: related
to the profit before exceptional items and amortisation of $1,824m), together with a credit of $30m (2022: $39m) on amortisation of
$118m (2022: on exceptional items and amortisation of $156m).
The differences between the tax charge for the year of 25% and the standard rate of corporation tax in the UK of 19.5% are explained
below:
2023
$m
2022
$m
Profit on ordinary activities before tax 2,155.8 1,668.1
Profit on ordinary activities multiplied by the rate of corporation tax in the UK of 19.5% (2022: 19%) 420.2 316.9
Effects of:
Use of foreign tax rates on overseas income 123.2 94.7
Adjustments due to changes in UK corporate tax rate – 9.6
Adjustments to prior years (5.8) (6.4)
Other 0.5 2.2
Total taxation charge 538.1 417.0
Ashtead Group plc Annual Report & Accounts 2023
146
Notes to the consolidated financial statements continued
8 Earnings per share
2023 2022
Earnings
$m
Weighted
average no.
of shares
million
Per
share
amount
cents
Earnings
$m
Weighted
average no.
of shares
million
Per
share
amount
cents
Basic earnings per share 1,617.7 439.1 368.4 1,251.1 445.3 280.9
Share options and share plan awards – 2.8 (2.3) – 1.9 (1.2)
Diluted earnings per share 1,617.7 441.9 366.1 1,251.1 4 47.2 279.7
Adjusted earnings per share may be reconciled to basic earnings per share as follows:
2023
cents
2022
cents
Basic earnings per share 368.4 280.9
Amortisation of intangibles 26.8 24.4
Exceptional items – 10.6
Tax on exceptional items and amortisation (6.7) (8.8)
Adjusted earnings per share 388.5 307.1
9 Dividends
2023
$m
2022
$m
Final dividend paid on 9 September 2022 of 67.50¢ (2022: 48.24¢) per 10p ordinary share 291.7 215.3
Interim dividend paid on 9 February 2023 of 15.00¢ (2022: 12.50¢) per 10p ordinary share 64.9 56.2
356.6 271.5
Reconciliation to consolidated cash flow statement
Dividends declared (recognised in the consolidated statement of changes in equity) 356.6 271.5
Translation adjustment 1.2 (2.2)
Dividends paid 357.8 269.3
In addition, the directors are proposing a final dividend in respect of the year ended 30 April 2023 of 85.0¢ (2022: 67.5¢) per share which
will absorb $372m of shareholders’ funds, based on the 437m shares qualifying for dividend on 12 June 2023. Subject to approval by
shareholders, it will be paid on 12 September 2023 to shareholders who are on the register of members on 11 August 2023.
Dividends are declared in US dollars and paid in sterling unless shareholders elect to receive their dividend in US dollars. The
exchange rate used to determine the sterling dividend is set based on the average exchange rate for the five working days prior to the
dividend currency exchange rate announcement.
Dividends are recognised in the consolidated statement of changes in equity on the date in which the liability arises. Dividends are
included in the consolidated statement of cash flows on the date of payment. As dividends are paid in both sterling as well as US
dollars, a translation adjustment arises when the date at which the liability arose differs from the payment date.
10 Inventories
2023
$m
2022
$m
Raw materials, consumables and spares 102.5 77.7
Goods for resale 78.8 90.8
181.3 168.5
Ashtead Group plc Annual Report & Accounts 2023
147
FINANCIAL STATEMENTS
11 Trade and other receivables
2023
$m
2022
$m
Trade receivables 1,492.0 1,259.6
Less: loss allowance (107.2) (85.6)
1,384.8 1,174.0
Other receivables
– Accrued revenue 109.6 106.5
– Other 164.8 109.9
1,659.2 1,390.4
The fair values of trade and other receivables are not materially different to the carrying values presented.
a) Trade receivables: credit risk
The Group’s exposure to the credit risk inherent in its trade receivables and the associated risk management techniques that the
Group deploys in order to mitigate this risk are discussed in Note 25. The credit periods offered to customers vary according to the
credit risk profiles of, and the invoicing conventions established in, the Group’s markets. The contractual terms on invoices issued to
customers vary between North America and the UK in that, invoices issued by Sunbelt UK are payable within 30-60 days whereas,
invoices issued by Sunbelt US and Sunbelt Canada are payable on receipt. Therefore, on this basis, a significant proportion of the
Group’s trade receivables are contractually past due. The loss allowance is calculated based on prior experience reflecting the level of
uncollected receivables over the last year within each business adjusted for factors that are specific to the receivables, the industry in
which we operate and the economic environment. Accordingly, the loss allowance cannot be attributed to specific receivables so the
aged analysis of trade receivables, including those past due, is shown gross of the loss allowance.
On this basis, the ageing analysis of trade receivables, including those past due, is as follows:
Current
$m
Trade receivables past due by:
Total
$m
Less than
30 days
$m
30–60
days
$m
60–90
days
$m
More than
90 days
$m
Carrying value at 30 April 2023 87.0 741.2 368.7 142.6 152.5 1,492.0
Carrying value at 30 April 2022 100.6 629.6 293.8 115.7 119.9 1,259.6
In practice, Sunbelt US and Sunbelt Canada operate on 30-day terms and consider receivables past due if they are unpaid after 30
days. On this basis, the Group’s ageing of trade receivables, including those past due, is as follows:
Current
$m
Trade receivables past due by:
Total
$m
Less than
30 days
$m
30–60
days
$m
60–90
days
$m
More than
90 days
$m
Carrying value at 30 April 2023 787.9 395.1 153.1 51.8 104.1 1,492.0
Carrying value at 30 April 2022 697.4 314.2 125.9 44.1 78.0 1,259.6
b) Movement in the loss allowance
2023
$m
2022
$m
At 1 May 85.6 73.8
Amounts written off or recovered during the year (25.4) (17.7)
Increase in allowance recognised in income statement 47.3 31.2
Currency movements (0.3) (1.7)
At 30 April 107.2 85.6
12 Cash and cash equivalents
2023
$m
2022
$m
Cash and cash equivalents 29.9 15.3
The carrying amount of cash and cash equivalents approximates to their fair value.
Ashtead Group plc Annual Report & Accounts 2023
148
Notes to the consolidated financial statements continued
13 Property, plant and equipment
Land and
buildings
$m
Rental
equipment
$m
Office and
workshop
equipment
$m
Motor
vehicles
$m
Total
$m
Cost or valuation
At 1 May 2021 459.2 11,854.9 341.6 884.5 13,540.2
Exchange differences (10.7) (156.8) (7.5) (11.7) (186.7)
Acquisitions 0.7 738.6 6.0 43.0 788.3
Reclassifications – (0.5) 0.1 0.4 –
Additions 106.4 1,999.2 73.6 218.1 2,397.3
Disposals (6.8) (896.6) (10.7) (68.0) (982.1)
At 30 April 2022 548.8 13,538.8 403.1 1,066.3 15,557.0
Exchange differences (3.1) (48.1) (1.1) (3.7) (56.0)
Acquisitions 25.6 618.6 (2.5) 39.8 681.5
Reclassifications – (2.0) 2.0 – –
Additions 164.5 3,262.1 113.5 232.0 3,772.1
Disposals (7.5) (1,543.8) (12.7) (108.5) (1,672.5)
At 30 April 2023 728.3 15,825.6 502.3 1,225.9 18,282.1
Depreciation
At 1 May 2021 169.2 4,946.0 227.1 421.8 5,764.1
Exchange differences (4.9) (73.2) (5.2) (6.3) (89.6)
Acquisitions 0.4 281.8 2.0 18.8 303.0
Reclassifications – 0.1 0.1 (0.2) –
Charge for the period 34.5 1,213.4 52.3 98.7 1,398.9
Disposals (4.3) (643.6) (8.6) (55.5) (712.0)
At 30 April 2022 194.9 5,724.5 267.7 477.3 6,664.4
Exchange differences (1.0) (22.2) (0.7) (1.4) (25.3)
Acquisitions 0.7 207.8 0.5 16.4 225.4
Reclassifications – (0.3) 0.3 – –
Charge for the period 35.4 1,384.0 60.7 120.4 1,600.5
Disposals (7.1) (1,117.3) (9.9) (89.7) (1,224.0)
At 30 April 2023 222.9 6,176.5 318.6 523.0 7,241.0
Net book value
At 30 April 2023 505.4 9,649.1 183.7 702.9 11,041.1
At 30 April 2022 353.9 7,814.3 135.4 589.0 8,892.6
$13m of rebuild costs were capitalised in the year (2022: $14m). Included within prior year depreciation is an impairment charge of $9m.
Ashtead Group plc Annual Report & Accounts 2023
149
FINANCIAL STATEMENTS
14 Right-of-use assets
Property
leases
$m
Other
leases
$m
Total
$m
Cost or valuation
At 1 May 2021 1,787.2 17.2 1,804.4
Exchange differences (21.6) (1.6) (23.2)
Additions 331.0 8.4 339.4
Acquisitions 125.9 – 125.9
Remeasurement 35.0 – 35.0
Disposals (11.6) (3.7) (15.3)
At 30 April 2022 2,245.9 20.3 2,266.2
Exchange differences (16.7) – (16.7)
Additions 324.5 10.4 334.9
Acquisitions 151.5 – 151.5
Remeasurement 53.4 – 53.4
Disposals (15.1) (2.6) (17.7)
At 30 April 2023 2,743.5 28.1 2,771.6
Depreciation
At 1 May 2021 253.7 4.8 258.5
Exchange differences (5.5) (0.5) (6.0)
Charge for the period 151.4 2.7 154.1
Disposals (2.8) (2.4) (5.2)
At 30 April 2022 396.8 4.6 401.4
Exchange differences (2.7) – (2.7)
Charge for the period 167.8 3.8 171.6
Disposals (3.2) (1.5) (4.7)
At 30 April 2023 558.7 6.9 565.6
Net book value
At 30 April 2023 2,184.8 21.2 2,206.0
At 30 April 2022 1,849.1 15.7 1,864.8
Included within prior year depreciation is an impairment charge of $6m.
Ashtead Group plc Annual Report & Accounts 2023
150
Notes to the consolidated financial statements continued
15 Intangible assets including goodwill
Goodwill
$m
Other intangible assets
Total
$m
Brand
names
$m
Customer
lists
$m
Contract
related
$m
Total
$m
Cost or valuation
At 1 May 2021 1,796.1 29.5 733.5 91.6 854.6 2,650.7
Recognised on acquisition 523.1 – 181.6 20.6 202.2 725.3
Exchange differences (19.2) (0.5) (13.8) (3.3) (17.6) (36.8)
At 30 April 2022 2,300.0 29.0 901.3 108.9 1,039.2 3,339.2
Recognised on acquisition 574.0 0.5 166.0 4.1 170.6 744.6
Exchange differences (8.5) (0.1) (9.3) (0.5) (9.9) (18.4)
At 30 April 2023 2,865.5 29.4 1,058.0 112.5 1,199.9 4,065.4
Amortisation
At 1 May 2021 – 28.4 361.8 77.1 4 67.3 4 67.3
Charge for the period – 0.3 83.9 24.4 108.6 108.6
Exchange differences – (0.4) (8.4) (3.2) (12.0) (12.0)
At 30 April 2022 – 28.3 437.3 98.3 563.9 563.9
Charge for the period – 0.7 110.0 7.0 117.7 117.7
Exchange differences – (0.1) (4.7) (0.3) (5.1) (5.1)
At 30 April 2023 – 28.9 542.6 105.0 676.5 676.5
Net book value
At 30 April 2023 2,865.5 0.5 515.4 7.5 523.4 3,388.9
At 30 April 2022 2,300.0 0.7 464.0 10.6 475.3 2,775.3
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (‘CGUs’) that benefit from that business
combination. Goodwill allocated to each of the Group’s CGUs is as follows:
2023
$m
2022
$m
Sunbelt US
Power & HVAC 292.3 245.1
Climate Control 85.3 75.2
General equipment and related businesses 1,927.0 1,657.1
2,304.6 1,977.4
Sunbelt UK
Engineered Access 32.4 32.4
General equipment and related businesses 182.4 72.5
214.8 104.9
Sunbelt Canada
General equipment and related businesses 346.1 217.7
Total goodwill 2,865.5 2,300.0
Ashtead Group plc Annual Report & Accounts 2023
151
FINANCIAL STATEMENTS
15 Intangible assets including goodwill (continued)
For the purposes of determining potential goodwill impairment, recoverable amounts are determined from value in use calculations
using cash flow projections based on the Group’s financial plans covering a three-year period which were adopted and approved by the
Board in April 2023. The key assumptions for these financial plans are those regarding revenue growth, margins and capital
expenditure required to replace the rental fleet and support the growth forecast which management estimates based on past
experience, market conditions and expectations for the future development of the market, including consideration of the risks and
opportunities related to climate-related matters as detailed within the Group’s TCFD disclosures. The projections consist of the
2023/24 budget, a further two years from the Group’s business plan and a further seven years’ cash flows. The valuation uses an
annual growth rate to determine the cash flows beyond the three-year forecast period of 2%, which does not exceed the average
long-term growth rates for the relevant markets, a terminal value reflective of market multiples and discount rates of 10% (2022: 11%),
11% (2022: 10%) and 10% (2022: 11%) for the US, UK and Canadian businesses respectively. The discount rates for each country are
determined by reference to the Group’s weighted average cost of capital.
The impairment review is potentially sensitive to changes in key assumptions used, most notably the discount rate and the annuity
growth rates. A sensitivity analysis has been undertaken by changing the key assumptions used for each CGU in the US, UK and
Canada. Based on this sensitivity analysis, no reasonably possible change in the assumptions resulted in the recoverable amount for
the CGUs identified above to fall below their carrying value.
US
General equipment and related businesses
Revenue for the general equipment business is linked primarily to US non-residential construction spend, which, based on market
forecasts, is expected to grow during the business plan period, underpinned by a significant level of large scale, multi-year projects.
The general equipment and related businesses have grown more rapidly than both the non-residential construction market and the
broader rental market in recent years and this outperformance is expected to continue over the business plan period, although not
necessarily to the same degree. EBITDA margins are forecast to improve slightly as inflationary cost pressures ease and the
businesses benefit from operational efficiencies and increased scale.
Power and HVAC and Climate Control
Revenue for the Power and HVAC and Climate Control businesses is in part linked to the level of non-residential construction and also
general levels of economic activity. These businesses are also expected to benefit from increased rental penetration. EBITDA margins
are forecast to improve slightly as the businesses benefit from higher rental penetration, operational efficiencies and increased scale.
UK
Revenue for each of the UK CGUs is linked primarily to UK non-residential construction spend. This market is more challenging than in
the US, with structural growth opportunities more difficult to achieve due to a higher level of rental penetration in the market. The
market is expected to grow over the business plan period. The Engineered Access business is also reliant on the events market which
is also expected to grow over the plan period. EBITDA margins are forecast to improve as the businesses focus on operational
improvement and leveraging the platform.
Canada
Revenue for Canada is linked primarily to Canadian non-residential construction spend which, based on market forecasts, is expected
to grow during the business plan period. The Canadian business has grown over the last three years more quickly than non-residential
construction and we expect it to continue to perform ahead of the market over the forecast period, although not necessarily to the
same degree as over recent years. EBITDA margins are forecast to increase as the business benefits from the integration of recent
acquisitions, operational improvement and increased scale.
16 Other non-current assets
2023
$m
2022
$m
HMRC state aid payment 44.7 44.7
Financial asset investments 41.3 40.0
Insurance receivable 13.1 16.5
Other 90.8 56.3
189.9 157.5
Non-current assets include the HMRC state aid payment which relates to amounts paid to HMRC in accordance with the charging
notice received in relation to the ongoing state aid investigation (further details are included in Note 28).
The financial asset investments of $41m (April 2022: $40m) represent two targeted investments in early development-stage
companies, which have been made in the US as part of the Group’s activity to support the transition to a lower carbon economy.
Ashtead Group plc Annual Report & Accounts 2023
152
Notes to the consolidated financial statements continued
17 Trade and other payables
2023
$m
2022
$m
Trade payables 581.6 399.2
Other taxes and social security 71.3 55.9
Accruals and deferred income 880.7 742.0
1,533.6 1,197.1
Trade and other payables include amounts relating to the purchase of fixed assets of $606m (2022: $363m). The fair values of trade
and other payables are not materially different from the carrying values presented.
18 Lease liabilities
Amounts recognised in the balance sheet
2023
$m
2022
$m
Maturity analysis – undiscounted cash flows:
Less than one year 240.2 196.2
One to two years 239.4 196.1
Two to three years 236.2 193.9
Three to four years 231.2 189.7
Four to five years 224.1 184.6
More than five years 2,339.1 1,864.0
Total undiscounted lease liabilities at 30 April 3,510.2 2,824.5
Impact of discounting (1,115.9) (829.3)
Lease liabilities included in the balance sheet 2,394.3 1,995.2
Included in current liabilities 233.2 188.6
Included in non-current liabilities 2,161.1 1,806.6
2,394.3 1,995.2
Amounts recognised in the income statement
2023
$m
2022
$m
Depreciation of right-of-use assets 171.6 15 4.1
Interest on lease liabilities 100.9 80.7
Expense relating to short-term leases 1.7 1.6
Expense relating to variable lease payments 17.7 7.8
291.9 244.2
Income from sub-leasing right-of-use assets (27.9) (20.6)
264.0 223.6
Amounts recognised in the statement of cash flows
2023
$m
2022
$m
Financing costs paid in relation to lease liabilities 100.9 79.7
Repayment of principal under lease liabilities 109.5 107.6
Total cash outflow for leases 210.4 187.3
Ashtead Group plc Annual Report & Accounts 2023
153
FINANCIAL STATEMENTS
19 Borrowings
2023
$m
2022
$m
Non-current
First priority senior secured bank debt 2,038.4 2,108.1
1.500% senior notes, due 2026 546.8 545.8
4.375% senior notes, due 2027 595.6 594.8
4.000% senior notes, due 2028 595.1 594.3
4.250% senior notes, due 2029 594.6 593.9
2.450% senior notes, due 2031 743.9 743.2
5.500% senior notes, due 2032 737.8 –
5.550% senior notes, due 2033 742.9 –
6,595.1 5,180.1
The senior secured bank debt is secured by way of fixed and floating charges over substantially all the Group’s property, plant and
equipment, inventory and trade receivables. The senior notes are guaranteed by Ashtead Group plc and all its principal subsidiary
undertakings.
First priority senior secured credit facility
At 30 April 2023, $4.5bn was committed by our senior lenders under the asset-based senior secured revolving credit facility (‘ABL
facility’) until August 2026. The amount utilised was $2,152m (including letters of credit totalling $73m). The ABL facility is secured by a
first priority interest in substantially all of the Group’s assets. Pricing for the $4.5bn revolving credit facility is based on average
availability according to a grid, varying from the applicable interest rate plus 125bp to 150bp. The applicable interest rate is based on
SOFR for US dollar loans, SONIA for sterling loans and CDOR for Canadian dollar loans. At 30 April 2023, the borrowing rate was the
applicable interest rate plus 150bp.
The only financial performance covenant under the asset-based first priority senior bank facility is a fixed charge ratio (comprising
LTM EBITDA before exceptional items less LTM net capital expenditure paid in cash over the sum of scheduled debt repayments plus
cash interest, cash tax payments and dividends paid in the last 12 months) which must be equal to or greater than 1.0 times.
This covenant does not, however, apply when availability (the difference between the borrowing base and facility utilisation) exceeds
$450m. At 30 April 2023 availability under the bank facility for covenant purposes was $2,573m ($2,537m at 30 April 2022), with an
additional $4,968m of suppressed availability meaning that the covenant was not measured at 30 April 2023 and is unlikely to be
measured in forthcoming quarters.
Senior notes
At 30 April 2023 the Group, through its wholly owned subsidiary Ashtead Capital, Inc., had seven series of senior notes outstanding.
The $550m 1.500% notes are due on 12 August 2026, the $600m 4.375% notes are due on 15 August 2027, the $600m 4.000% notes are
due on 1 May 2028, the $600m 4.250% notes are due on 1 November 2029, the $750m 2.450% notes are due on 12 August 2031, the
$750m 5.500% notes are due on 11 August 2032 and the $750m 5.550% notes are due on 30 May 2033.
The rates of interest at the balance sheet date were as follows:
2023 2022
First priority senior secured bank debt – revolving advances in dollars 6.414% 1.990%
Senior notes – $550m nominal value 1.500% 1.500%
– $600m nominal value 4.375% 4.375%
– $600m nominal value 4.000% 4.000%
– $600m nominal value 4.250% 4.250%
– $750m nominal value 2.450% 2.450%
– $750m nominal value 5.500% –
– $750m nominal value 5.550% –
Ashtead Group plc Annual Report & Accounts 2023
154
Notes to the consolidated financial statements continued
20 Provisions
Insurance
$m
Contingent
consideration
$m
Other
$m
Total
$m
At 1 May 2022 96.3 33.4 7.1 136.8
Acquired businesses – 35.8 – 35.8
Exchange differences – 1.1 (0.2) 0.9
Utilised (67.2) (21.9) (1.0) (90.1)
Released – (2.5) – (2.5)
Charged in the year 71.8 – – 71.8
Amortisation of discount 1.0 0.8 – 1.8
At 30 April 2023 101.9 46.7 5.9 154.5
2023
$m
2022
$m
Included in current liabilities 78.6 68.8
Included in non-current liabilities 75.9 68.0
154.5 136.8
Insurance provisions relate to the discounted estimated gross liability in respect of claims, including automotive, workers’
compensation and general liability, to be incurred for events occurring up to the year-end and covered under the Group’s insurance
programmes, which are expected to be utilised over a period of approximately eight years. The provision is established based on advice
received from independent actuaries of the estimated total cost of the insured risk based on historical claims experience. $21m (2022:
$29m) of this total liability is due from insurers and is included within ‘Other receivables’.
The provision for contingent consideration relates to recent acquisitions and is based on the post-acquisition performance of the
acquired businesses. The consideration is expected to be paid out over the next two years and is reassessed at each reporting date.
21 Deferred tax
Accelerated tax
depreciation
$m
Tax losses
$m
Other
assets from
temporary
differences
$m
Other
liabilities from
temporary
differences
$m
Total
$m
At 1 May 2022 1,791.8 (15.3) (174.2) 93.1 1,695.4
Exchange differences (3.5) (0.3) 0.4 (0.7) (4.1)
Charged/(credited) to income statement 339.7 (3.3) (85.3) 12.0 263.1
Credited to equity – (0.2) (0.2) (0.7) (1.1)
Acquisitions 21.2 (3.6) 0.4 24.0 42.0
At 30 April 2023 2,149.2 (22.7) (258.9) 127.7 1,995.3
The Group has not recognised a deferred tax asset of $15m (2022: $14m) in the US and $2m (2022: $2m) in the UK in respect of certain
losses carried forward where it was not considered probable at the balance sheet date that these losses would be utilised.
At the balance sheet date, no temporary differences associated with undistributed earnings of subsidiaries are considered to exist as
UK tax legislation largely exempts overseas dividends received from UK tax.
Ashtead Group plc Annual Report & Accounts 2023
155
FINANCIAL STATEMENTS
22 Share capital and reserves
Ordinary shares of 10p each:
30 April
2023
Number
30 April
2022
Number
30 April
2023
$m
30 April
2022
$m
Issued and fully paid 451,354,833 451,354,833 81.8 81.8
During the year, the Company purchased 5.2m ordinary shares at a total cost of $261m (£218m) under the Group’s share buyback
programme, which are held in treasury. At 30 April 2023, 12.9m (April 2022: 7.7m) shares were held by the Company ($741m; April
2022: $480m) and a further 1.0m (April 2022: 1.2m) shares were held by the Company’s Employee Share Ownership Trust ($39m; April
2022: $45m) .
23 Share-based payments
The ESOT facilitates the provision of shares under the Group’s long-term incentive plans. It holds a beneficial interest in 986,767
ordinary shares of the Company acquired at an average cost of 2,935p (3,931¢) per share. The shares had a market value of $57m
(£45m) at 30 April 2023. The ESOT has waived the right to receive dividends on the shares it holds. The costs of operating the ESOT are
borne by the Group but are not significant.
Details of the awards given under the long-term incentive plans are given on pages 107 and 108, and 114 and 115. The costs of these
schemes are charged to the income statement over the vesting period, based on the fair value of the award at the grant date and the
likelihood of allocations vesting under the schemes. In 2023, there was a net charge to pre-tax profit in respect of the long-term
incentive awards of $45m (2022: $48m). After tax, the total charge was $35m (2022: $37m).
The fair value of awards granted during the year is estimated using a Black-Scholes option pricing model with the following
assumptions:
July 2022
Share price at grant date 3,474p
Exercise price –
Dividend yield 2.11%
Volatility 74.63%
Risk-free rate 1.79%
Expected life 36 months
Expected volatility was determined by calculating the historical volatility over the previous three years. The expected life used in the
model is based on the terms of the plan.
Details of the long-term incentive awards outstanding during the year are as follows:
2023 2022
Number
Weighted
average fair
value at
grant date Number
Weighted
average fair
value at
grant date
Outstanding at 1 May 2,986,439 3,871p 2,965,144 3,279p
Granted 822,191 3,272p 592,841 5,385p
Exercised (542,004) 2,223p (482,958) 2,174p
Expired/lapsed (52,595) 3,849p (88,588) 3,428p
Outstanding at 30 April 3,214,031 4,005p 2,986,439 3,871p
Exercisable at 30 April – n/a – n/a
The weighted average share price of those awards exercised during the year was 3,484p (2022: 5,426p). The weighted average
remaining contractual life of the share options outstanding at 30 April 2023 was 14 months (2022: 18 months).
Ashtead Group plc Annual Report & Accounts 2023
156
Notes to the consolidated financial statements continued
24 Pensions
Defined contribution plans
The Group operates pension plans for the benefit of qualifying employees. The plans for new employees throughout the Group are all
defined contribution plans. Pension costs for defined contribution plans were $40m (2022: $34m).
Defined benefit plan
The Group also has a defined benefit plan which was closed to new members in 2001 and closed to future accrual in October 2020.
The plan is a funded defined benefit plan with trustee-administered assets held separately from those of the Group. During the year,
the Trustees were composed of representatives of both the Company and plan members, including one of whom who was a corporate
trustee. Subsequent to year end, the corporate trustee has been appointed as sole trustee to the plan. The Trustees are required by law
to act in the interest of all relevant beneficiaries and are responsible for the investment policy of the assets and the day-to-day
administration of the benefits.
The plan is a final salary plan which provides members a guaranteed level of pension payable for life. The level of benefits provided by
the plan depends on members’ length of service and their salary at the date of leaving the plan.
The plan’s duration is an indicator of the weighted-average time until benefit payments are made. For the plan as a whole, the
duration at 30 April 2023 is approximately 16 years. The Group does not expect contributions to be paid to the plan during the 2023/24
financial year.
The plan exposes the Group to a number of risks, the most significant being investment risk, interest rate risk, inflation risk and life
expectancy risk.
The most recent actuarial valuation was carried out as at 30 April 2022 by a qualified independent actuary and showed a funding
surplus of £11.1m ($13.9m at April 2023 exchange rate). The actuary was engaged by the Company to perform a valuation in accordance
with IAS 19 (revised) as at 30 April 2023. The principal financial assumptions made by the actuary were as follows:
2023 2022
Discount rate 4.8% 3.1%
Inflation assumption – RPI 3.2% 3.4%
– CPI 2.3% 3.2%
Rate of increase in pensions in payment 3.0% 3.3%
Pensioner life expectancy assumed in the 30 April 2023 update is based on the ‘S3PA CMI 2021’ projection model mortality tables
adjusted so as to apply a minimum annual rate of improvement of 1.25% a year. Samples of the ages to which pensioners are assumed
to live are as follows:
2023 2022
Life expectancy of pensioners currently aged 65
Male 85.9 86.2
Female 87.7 88.1
Life expectancy at age 65 for future pensioner currently aged 45
Male 87.2 87.5
Female 89.3 89.6
The plan’s assets are invested in the following asset classes:
Fair value
2023
$m
2022
$m
UK equities – 36.9
US equities – 42.6
Japanese equities – 7.5
Emerging market equities – 3.9
Global loan fund – 12.1
Buy and maintain fund 17.5 7.3
Liability driven investment funds 77.2 19.0
Infrastructure – 11.0
Cash and cash equivalents 11.2 0.9
105.9 141.2
Ashtead Group plc Annual Report & Accounts 2023
157
FINANCIAL STATEMENTS
24 Pensions (continued)
The amounts recognised in the balance sheet are determined as follows:
2023
$m
2022
$m
Fair value of plan assets 105.9 141.2
Present value of funded defined benefit obligation (87.5) (122.7)
Net asset recognised in the balance sheet 18.4 18.5
The components of the defined benefit cost recognised in the income statement are as follows:
2023
$m
2022
$m
Net interest on the net defined benefit plan 0.6 0.1
Net income in the income statement 0.6 0.1
The remeasurements of the defined benefit plan recognised in the statement of comprehensive income are as follows:
2023
$m
2022
$m
Actuarial gain due to changes in financial assumptions 33.6 18.1
Actuarial gain due to changes in demographic assumptions 1.4 0.2
Actuarial loss arising from experience adjustments (1.6) (1.8)
Loss on plan assets excluding amounts recognised in net interest (36.3) (5.1)
Remeasurement of the defined benefit pension plan (2.9) 11.4
Movements in the present value of defined benefit obligations were as follows:
2023
$m
2022
$m
At 1 May 122.7 152.3
Interest cost 3.6 3.0
Remeasurements
– Actuarial gain due to changes in financial assumptions (33.6) (18.1)
– Actuarial gain due to changes in demographic assumptions (1.4) (0.2)
– Actuarial loss arising from experience adjustments 1.6 1.8
Benefits paid (3.9) (3.2)
Exchange differences (1.5) (12.9)
At 30 April 87.5 122.7
The key assumptions used in valuing the defined benefit obligation are: discount rate, inflation and mortality. The sensitivity of the
results to these assumptions is as follows:
− An increase in the discount rate of 0.5% would result in a $6m (2022: $9m) decrease in the defined benefit obligation.
− An increase in the inflation rate of 0.5% would result in a $5m (2022: $8m) increase in the defined benefit obligation.
This includes the resulting change to other assumptions that are related to inflation such as pensions and salary growth.
− A one-year increase in the pensioner life expectancy at age 65 would result in a $3m (2022: $6m) increase in the defined
benefit obligation.
The above sensitivity analyses have been determined based on reasonably possible changes to the significant assumptions, while
holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some assumptions may be correlated.
The sensitivity information shown above has been prepared using the same method as adopted when adjusting the results of the latest
funding valuation to the balance sheet date. This is the same approach as has been adopted in previous periods.
Movements in the fair value of plan assets were as follows:
2023
$m
2022
$m
At 1 May 141.2 158.5
Interest income 4.2 3.1
Remeasurement – loss on plan assets excluding amounts recognised in net interest (36.3) (5.1)
Employer contributions 2.2 2.5
Benefits paid (3.9) (3.2)
Exchange differences (1.5) (14.6)
At 30 April 105.9 141.2
The actual return on plan assets was a loss of $32m (2022: $2m).
Ashtead Group plc Annual Report & Accounts 2023
158
Notes to the consolidated financial statements continued
25 Financial risk management
The Group’s trading and financing activities expose it to various financial risks that, if left unmanaged, could adversely impact on
current or future earnings. Although not necessarily mutually exclusive, these financial risks are categorised separately according
to their different generic risk characteristics and include market risk (foreign currency risk and interest rate risk), credit risk and
liquidity risk.
It is the role of the Group treasury function to manage and monitor the Group’s financial risks and internal and external funding
requirements in support of the Group’s corporate objectives. Treasury activities are governed by policies and procedures approved
by the Board and monitored by the Finance and Administration Committee. In particular, the Board of directors or, through delegated
authority, the Finance and Administration Committee, approves any derivative transactions. Derivative transactions are only
undertaken for the purposes of managing interest rate risk and currency risk. The Group does not trade in financial instruments.
The Group maintains treasury control systems and procedures to monitor liquidity, currency, credit and financial risks.
Market risk
The Group’s activities expose it primarily to interest rate and currency risk. Interest rate risk is monitored on a continuous basis
and managed, where appropriate, through the use of interest rate swaps, whereas the use of forward foreign exchange contracts
to manage currency risk is considered on an individual non-trading transaction basis. The Group is not exposed to commodity price
risk or equity price risk as defined in IFRS 7.
Interest rate risk
Management of fixed and variable rate debt
The Group has fixed and variable rate debt in issue with 69% of the drawn debt at a fixed rate as at 30 April 2023, excluding lease
liabilities. The Group’s accounting policy requires all borrowings to be held at amortised cost. As a result, the carrying value of fixed
rate debt is unaffected by changes in credit conditions in the debt markets and there is therefore no exposure to fair value interest
rate risk. The Group’s debt that bears interest at a variable rate comprises all outstanding borrowings under the senior secured credit
facility. Pricing is based on average availability according to a grid, varying from the applicable interest rate plus 125bp to 150bp.
The applicable interest rate is based on SOFR for US dollar loans, SONIA for sterling loans and CDOR for Canadian dollar loans.
At 30 April 2023, the borrowing rate was the applicable interest rate plus 150bp. The Group periodically utilises interest rate swap
agreements to manage and mitigate its exposure to changes in interest rates. However, during the year ended and as at 30 April 2023,
the Group had no such swap agreements outstanding. The Group also may at times hold cash and cash equivalents which earn
interest at a variable rate.
Net variable rate debt sensitivity
At 30 April 2023, based upon the amount of variable rate debt outstanding, the Group’s pre-tax profits would change by approximately
$21m for each one percentage point change in interest rates applicable to the variable rate debt and, after tax effects, equity would
change by approximately $16m.
Currency risk
Currency risk is predominantly translation risk as there are no significant transactions in the ordinary course of business that take
place between foreign entities. The Group’s reporting currency is US dollars. The majority of our assets, liabilities, revenue and costs
are denominated in US dollars, but sterling and Canadian dollars make up 25% of our net assets. Fluctuations in the value of pounds
sterling and Canadian dollars with respect to US dollars may have an impact on our financial condition and results of operations as
reported in US dollars. The Group’s financing is arranged such that the majority of its debt and interest expense is in US dollars. At
30 April 2023, 88% of its debt (including lease liabilities) was denominated in US dollars.
The Group’s exposure to exchange rate movements on trading transactions is relatively limited. All Group companies invoice revenue
in their respective local currency and generally incur expense and purchase assets in their local currency. Consequently, the Group
does not routinely hedge either forecast foreign exchange exposures or the impact of exchange rate movements on the translation of
overseas profits into dollars. Where the Group does hedge, it maintains appropriate hedging documentation. Foreign exchange risk on
significant non-trading transactions is considered on an individual basis.
Resultant impacts of reasonably possible changes to foreign exchange rates
Based on the current currency mix of our profits and on current sterling and dollar debt levels, interest and exchange rates at 30 April
2023, a 1% change in the pound sterling and Canadian dollar to US dollar exchange rates would impact pre-tax profit by $0.2m and
equity by approximately $15m. At 30 April 2023, the Group had no outstanding foreign exchange contracts.
Credit risk
The Group’s principal financial assets are cash and bank balances and trade and other receivables. The Group’s credit risk is primarily
attributable to its trade receivables. The amounts presented in the balance sheet are net of loss allowances. The credit risk on liquid
funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, which are net of
impairment losses, represent the Group’s maximum exposure to credit risk.
The Group has a large number of unrelated customers, serving over 800,000 during the financial year, and does not have any
significant credit exposure to any particular customer. Each business segment manages its own exposure to credit risk according to
the economic circumstances and characteristics of the markets they serve. The Group believes that management of credit risk on a
devolved basis enables it to assess and manage it more effectively. However, broad principles of credit risk management practice are
observed across the Group, such as the use of credit reference agencies and the maintenance of credit control functions.
Ashtead Group plc Annual Report & Accounts 2023
159
FINANCIAL STATEMENTS
25 Financial risk management (continued)
Liquidity risk
Liquidity risk is the risk that the Group could experience difficulties in meeting its commitments to creditors as financial liabilities fall
due for payment.
The Group uses both short and long-term cash forecasts to assist in monitoring cash flow requirements ensuring sufficient cash is
available to meet operational needs. The Group monitors available facilities against forward requirements on a regular basis.
The Group generates significant free cash flow before investment (defined as cash flow from operations less replacement capital
expenditure net of proceeds of asset disposals, interest paid and tax paid). This free cash flow before investment is available to the
Group to invest in growth capital expenditure, acquisitions, dividend payments and other returns to shareholders or to reduce debt.
In addition to the strong free cash flow from normal trading activities, additional liquidity is available through the Group’s ABL facility.
At 30 April 2023, availability under the $4.5bn facility was $2,573m ($2,537m at 30 April 2022), which compares with the threshold of
$450m, above which the covenant does not apply.
Contractual maturity analysis
Trade receivables, the principal class of non-derivative financial asset held by the Group, are settled gross by customers.
The following table presents the Group’s outstanding contractual maturity profile for its non-derivative financial liabilities, excluding
trade and other payables which fall due within one year and lease liabilities which are analysed in Note 18. The analysis presented is
based on the undiscounted contractual maturities of the Group’s financial liabilities, including any interest that will accrue, except where
the Group is entitled and intends to repay a financial liability, or part of a financial liability, before its contractual maturity. The
undiscounted cash flows have been calculated using foreign currency exchange rates and interest rates ruling at the balance sheet date.
At 30 April 2023
Undiscounted cash flows – year to 30 April
Total
$m
2024
$m
2025
$m
2026
$m
2027
$m
2028
$m
Thereafter
$m
Bank and other debt – – – 2,038.4 – – 2,038.4
1.500% senior notes – – – 550.0 – – 550.0
4.375% senior notes – – – – 600.0 – 600.0
4.000% senior notes – – – – – 600.0 600.0
4.250% senior notes – – – – – 600.0 600.0
2.450% senior notes – – – – – 750.0 750.0
5.500% senior notes – – – – – 750.0 750.0
5.550% senior notes – – – – – 750.0 750.0
– – – 2,588.4 600.0 3,450.0 6,638.4
Interest payments 316.0 316.0 316.0 219.5 158.4 487.0 1,812.9
316.0 316.0 316.0 2,807.9 758.4 3,937.0 8,451.3
Letters of credit of $73m (2022: $57m) are provided and guaranteed under the ABL facility which expires in August 2026.
At 30 April 2022
Undiscounted cash flows – year to 30 April
Total
$m
2023
$m
2024
$m
2025
$m
2026
$m
2027
$m
Thereafter
$m
Bank and other debt – – – – 2,108.1 – 2,108.1
1.500% senior notes – – – – 550.0 – 550.0
4.375% senior notes – – – – – 600.0 600.0
4.000% senior notes – – – – – 600.0 600.0
4.250% senior notes – – – – – 600.0 600.0
2.450% senior notes – – – – – 750.0 750.0
– – – – 2,658.1 2,550.0 5,208.1
Interest payments 144.4 144.4 144.4 144.4 96.8 174.6 849.0
144.4 144.4 144.4 144.4 2,754.9 2,724.6 6,057.1
Fair value of financial instruments
Financial assets and liabilities are measured in accordance with the fair value hierarchy and assessed as Level 1, 2 or 3 based on the
following criteria:
− Level 1: fair value measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
− Level 2: fair value measurements derived from inputs other than quoted prices that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
− Level 3: fair value measurements derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data.
Ashtead Group plc Annual Report & Accounts 2023
160
Notes to the consolidated financial statements continued
Fair value of derivative financial instruments
At 30 April 2023, the Group had no derivative financial instruments. The embedded prepayment options included within the senior
notes are either closely related to the host debt contract or immaterial and hence, are not accounted for separately. These loan notes
are carried at amortised cost.
Fair value of non-derivative financial assets and liabilities
The table below provides a comparison, by category of the carrying amounts and the fair values of the Group’s non-derivative financial
assets and liabilities.
At 30 April 2023 At 30 April 2022
Book value
$m
Fair value
$m
Book value
$m
Fair value
$m
Long-term borrowings
– first priority senior secured bank debt Level 1 2,038.4 2,038.4 2,108.1 2,108.1
– 1.500% senior notes Level 1 549.0 486.1 548.8 487.4
– 4.375% senior notes Level 1 600.0 573.0 600.0 583.5
– 4.000% senior notes Level 1 600.0 560.3 600.0 564.7
– 4.250% senior notes Level 1 600.0 556.5 600.0 566.2
– 2.450% senior notes Level 1 748.4 595.3 748.2 607.5
– 5.500% senior notes Level 1 743.0 741.6 – –
– 5.550% senior notes Level 1 748.3 744.4 – –
Total long-term borrowings 6,627.1 6,295.6 5,205.1 4,917.4
Deferred costs of raising finance (32.0) – (25.0) –
6,595.1 6,295.6 5,180.1 4,917.4
Other financial instruments
1
Contingent consideration provision Level 3 46.7 46.7 33.4 33.4
Financial asset investments Level 3 41.3 41.3 40.0 40.0
Cash and cash equivalents Level 1 29.9 29.9 15.3 15.3
1 The Group’s trade and other receivables, trade and other payables and lease liabilities are not shown in the table above. The carrying amounts of trade and other
receivables and trade and other payables categories approximate their fair values. Required disclosures relating to lease liabilities are provided in Note 18.
Contingent consideration provisions are a Level 3 financial liability. Future anticipated payments to vendors in respect of contingent
consideration are initially recorded at fair value which is the present value of the expected cash outflows of the obligations. The
obligations are dependent upon the future financial performance of the businesses acquired. The fair value is estimated based on
internal financial projections prepared in relation to the acquisition with the contingent consideration discounted to present value using
a discount rate in line with the Group’s cost of debt.
Financial asset investments are measured at fair value and are Level 3 financial assets. $21m of these assets are held at fair value
through profit and loss and $20m of these assets are measured at fair value through other comprehensive income. Their fair values
are estimated based on the latest transaction price and any subsequent investment-specific adjustments. Details of the movement in
the fair value during the year are as follows:
2023
$m
2022
$m
At 1 May 40.0 –
Additions 42.4 40.0
Foreign exchange movement (0.6) –
Interest 1.3 –
Loss for the year (41.8) –
At 30 April 41.3 40.0
During the period, the Group made one new investment, namely Britishvolt ($42m), a UK company involved in the development of
electric vehicle battery technology. In January 2023, Britishvolt entered administration following failure to secure additional funding
and as a result, the Group has estimated the fair value of its investment to be $nil and consequently recognised a movement in the fair
value of the equity component of its investment ($37m) through other comprehensive income and an impairment of the $5m
convertible loan component through the income statement.
Ashtead Group plc Annual Report & Accounts 2023
161
FINANCIAL STATEMENTS
26 Notes to the cash flow statement
a) Cash flow from operating activities
2023
$m
2022
$m
Operating profit 2,522.0 1,947.8
Depreciation 1,772.1 1,553.0
Amortisation 117.7 108.6
EBITDA 4,411.8 3,609.4
Profit on disposal of rental equipment (185.1) (78.9)
Profit on disposal of other property, plant and equipment (19.0) (9.0)
Increase in inventories (4.7) (67.2)
Increase in trade and other receivables (209.6) (164.1)
Increase in trade and other payables 34.2 68.8
Exchange differences 1.2 (0.6)
Other non-cash movement 44.8 48.1
Cash generated from operations before changes in rental equipment 4,073.6 3,406.5
b) Acquisitions
2023
$m
2022
$m
Cash consideration paid
– acquisitions in the period (net of cash acquired) 1,061.3 1,264.8
– contingent consideration 21.9 12.6
1,083.2 1,277.4
During the year, 50 acquisitions were made for a total cash consideration of $1,061m (2022: $1,265m), after taking account of net cash
acquired of $32m (2022: $20m). Further details are provided in Note 27.
Payments for contingent consideration on prior year acquisitions were also made of $22m (2022: $13m).
c) Analysis of net debt
Net debt consists of total borrowings less cash and cash equivalents. Borrowings exclude accrued interest. Non-US dollar
denominated balances are translated to US dollars at rates of exchange ruling at the balance sheet date.
1 May
2022
$m
Cash
flow
$m
Non-cash movements
30 April
2023
$m
Exchange
movement
$m
Debt
acquired
$m
New lease
liabilities
$m
Other
movements
$m
Long-term borrowings 5,180.1 1,353.5 (23.6) 77.9 – 7.2 6,595.1
Lease liabilities 1,995.2 (109.5) (14.8) 150.0 373.4 – 2,394.3
Total liabilities from financing activities 7,175.3 1,244.0 (38.4) 227.9 373.4 7.2 8,989.4
Cash and cash equivalents (15.3) (15.2) 0.6 – – – (29.9)
Net debt 7,160.0 1,228.8 (37.8) 227.9 373.4 7.2 8,959.5
1 May
2021
$m
Cash
flow
$m
Non-cash movements
30 April
2022
$m
Exchange
movement
$m
Debt
acquired
$m
New lease
liabilities
$m
Other
movements
$m
Long-term borrowings 4,194.0 991.8 (29.5) 5.8 – 18.0 5,180.1
Lease liabilities 1,633.3 (107.6) (18.4) 125.9 362.0 – 1,995.2
Total liabilities from financing activities 5,827.3 884.2 (47.9) 131.7 362.0 18.0 7,175.3
Cash and cash equivalents (26.6) 10.5 0.8 – – – (15.3)
Net debt 5,800.7 894.7 (47.1) 131.7 362.0 18.0 7,160.0
Ashtead Group plc Annual Report & Accounts 2023
162
Notes to the consolidated financial statements continued
27 Acquisitions
During the year, the following acquisitions were completed:
i)
On 5 May 2022, Sunbelt UK acquired the entire share capital of Movietech Camera Rentals Limited and Movietech Cymru
Limited (together ‘Movietech’). Movietech is a specialty business.
ii)
On 13 May 2022, Sunbelt US acquired the business and assets of the power rental division of Filmwerks, LLC (‘Filmwerks’).
Filmwerks is a specialty business in North Carolina.
iii)
On 20 May 2022, Sunbelt US acquired the business and assets of Mashburn Equipment, L.L.C. (‘Mashburn’). Mashburn is a
general tool business in Georgia.
iv)
On 1 June 2022, Sunbelt Canada acquired the entire share capital of MacFarlands Limited (‘MacFarlands’). MacFarlands is a
general tool business in Nova Scotia and New Brunswick.
v)
On 8 June 2022, Sunbelt US acquired the business and assets of Amos Metz Rentals & Sales, LLC (‘Amos Metz’). Amos Metz is
a general tool business in California.
vi)
On 29 June 2022, Sunbelt US acquired the business and assets of George’s Tool Rental, Inc. (‘GTR’). GTR is a general tool
business in Pennsylvania.
vii)
On 7 July 2022, Sunbelt UK acquired the entire share capital of PKE Lighting Holdings Limited (‘PKE’). PKE is a
specialty business.
viii)
On 13 July 2022, Sunbelt US acquired the business and assets of Milford Rent-All, Inc. (‘Milford’). Milford is a general tool
business in Maine.
ix)
On 15 July 2022, Sunbelt US acquired the business and assets of R&N Tool Rental, Inc. (‘R&N’). R&N is a general tool business
in Indiana.
x)
On 20 July 2022, Sunbelt US acquired the business and assets of Chump Management, L.C., trading as Power Equipment
Rental (‘PER’). PER is a general tool business in Utah.
xi)
On 22 July 2022, Sunbelt US acquired the business and assets of Harmar Contractors Equipment, Inc. (‘Harmar’). Harmar is a
general tool business in Pennsylvania.
xii)
On 28 July 2022, Sunbelt US acquired the business and assets of A-V Equipment Rentals, Inc. (‘A-V’). A-V is a general tool
business in California.
xiii)
On 2 August 2022, Sunbelt Canada acquired the entire share capital of Compact Rentals Limited (‘Compact’). Compact is a
general tool business in Alberta.
xiv)
On 3 August 2022, Sunbelt US acquired the business and assets of Rental Country Inc. (‘Rental Country’). Rental Country is a
general tool business in New Jersey.
xv)
On 10 August 2022, Sunbelt US acquired the business and assets of R.J. Lalonde, Inc. (‘Lalonde’). Lalonde is a general tool
business in California.
xvi)
On 24 August 2022, Sunbelt US acquired the business and assets of Alaska Pacific Rental, LLC (‘APR’). APR is a general tool
business in Alaska.
xvii)
On 31 August 2022, Sunbelt UK acquired the entire share capital of Optimum Power Services Limited (‘OPS’). OPS is a
specialty business.
xviii)
On 1 September 2022, Sunbelt Canada acquired the entire share capital of Flagro Industries Limited (‘Flagro’). Flagro is a
specialty business in Ontario.
xix)
On 1 September 2022, Sunbelt Canada acquired the entire share capital of Xtreme Rentals Ltd. (‘Xtreme’). Xtreme is a general
tool business in Alberta.
xx)
On 16 September 2022, Sunbelt US acquired the business and assets of Tel-Power Tool & Equipment Rental, Inc. (‘Tel-Power’).
Tel-Power is a general tool business in Pennsylvania.
xxi)
On 21 September 2022, Sunbelt US acquired the business and assets of Rent Mart, Inc., trading as Absolute Equipment
(‘Absolute Equipment’). Absolute Equipment is a general tool business in Pennsylvania.
xxii)
On 3 October 2022, Sunbelt UK acquired the entire share capital of Media Access Solutions (MAS) Limited (‘MAS’). MAS is a
specialty business.
xxiii)
On 5 October 2022, Sunbelt US acquired the business and assets of Runjesnor, Limited Partnership, trading as Bilt Rite (‘Bilt
Rite’). Bilt Rite is a specialty business in Texas.
xxiv)
On 11 October 2022, Sunbelt US acquired the business and assets of Comeback Rentals, LLC (‘Comeback’). Comeback is a
general tool business in South Carolina.
xxv)
On 12 October 2022, Sunbelt US acquired the business and assets of Presbone Corporation d/b/a Pinellas Rental Center
(‘PRC’). PRC is a general tool business in Florida.
xxvi) On 19 October 2022, Sunbelt US acquired the business and assets of Meco Miami, Inc. (‘Meco Miami’). Meco Miami is a general
tool business in Florida.
Ashtead Group plc Annual Report & Accounts 2023
163
FINANCIAL STATEMENTS
27 Acquisitions (continued)
xxvii) On 26 October 2022, Sunbelt US acquired the business and assets of Heater Rental Services, LLC (‘HRS’). HRS is a general tool
and specialty business in Minnesota.
xxviii)
On 1 November 2022, Sunbelt Canada acquired the entire share capital of Modu-Loc Fence Rentals LP and Sunbelt US
acquired the entire share capital of Modu-Loc USA (together, ‘Modu-Loc’). Modu-Loc is a specialty business operating across
Canada and in Texas, US.
xxix)
On 4 November 2022, Sunbelt US acquired the business and assets of Iron Oak Energy, LLC and Spoonbill Logistics, LLC
(together ‘IOS’). IOS is a general tool business in Louisiana.
xxx)
On 9 November 2022, Sunbelt US acquired the business and assets of Wagner Rental & Supply, Inc., Wagner Tool Rental of
Jackson, Inc., Wagner Rental and Supply of Ashland, Inc., and Wagner Rental and Supply of Chillicothe, LLC (together
‘Wagner’). Wagner is a general tool business in Ohio and Kentucky.
xxxi)
On 10 November 2022, Sunbelt US acquired the business and assets of QxTwo Equipment Sales, LLC (‘QxTwo’). QxTwo is a
specialty business in South Carolina.
xxxii)
On 16 November 2022, Sunbelt US acquired the business and assets of Ohio Rental Mt. Vernon, Inc. and Ohio Rental of
Johnstown, Inc. (together ‘Ohio Rental’). Ohio Rental is a general tool business in Ohio.
xxxiii)
On 2 December 2022, Sunbelt Canada acquired the entire share capital of Studio City Scaffold Ltd. (‘Studio City’). Studio City is a
specialty business operating in Toronto and Vancouver, Canada and in Los Angeles, US.
xxxiv)
On 7 December 2022, Sunbelt US acquired the business and assets of Portable Air, L.C. (‘Portable Air’). Portable Air is a
specialty business operating in Florida, Texas, and Louisiana.
xxxv)
On 8 December 2022, Sunbelt UK acquired the entire share capital Alpha Grip (UK) Limited (‘Alpha Grip’). Alpha Grip is a
specialty business.
xxxvi)
On 14 December 2022, Sunbelt US acquired the business and assets of Diamond Rentals, Inc. (‘Diamond’). Diamond is a
general tool business operating in Washington.
xxxvii)
On 12 January 2023, Sunbelt US acquired the entire share capital of Lift Works, Inc. (‘Lift Works’). Lift Works is a general tool
business operating in Illinois.
xxxviii)
On 18 January 2023, Sunbelt US acquired the business and assets of Straight Up Equipment LLC (‘Straight Up’). Straight Up is a
general tool business operating in Ohio.
xxxix)
On 7 February 2023, Sunbelt US acquired the business and assets of Key Rentals Group, LLC and TBG Equipment, LLC
(together ‘Key Rentals’). Key Rentals is a specialty business operating in Montana.
xl)
On 17 February 2023, Sunbelt US acquired the business and assets of West Ashley Tool & Rental LLC (‘West Ashley’). West
Ashley is a general tool business operating in South Carolina.
xli)
On 21 February 2023, Sunbelt US acquired the business and assets of C2 Equipment Rental, LLC (‘C2’). C2 is a general tool
business operating in Florida.
xlii)
On 22 February 2023, Sunbelt US acquired the business and assets of BigSky Rents & Events, Inc. (‘BigSky’). BigSky is a
general tool business operating in Montana.
xliii)
On 28 February 2023, Sunbelt US acquired the entire share capital of Bullet Rentals & Sales, Inc. (‘Bullet’). Bullet is a general
tool business operating in Oregon.
xliv)
On 1 March 2023, Sunbelt Canada acquired the entire share capital of Ottawa Rental and Supply Ltd., trading as Ontario Rental
& Supply (‘ORS’). ORS is a general tool business operating in Ontario.
xlv)
On 3 March 2023, Sunbelt US acquired the business and assets of Ned R. Werbe, Inc., trading as A Rental Service Company
(‘ARS’). ARS is a general tool business operating in Indiana.
xlvi)
On 15 March 2023, Sunbelt US acquired the business and assets of Double D Rentals, Inc. (‘Double D’). Double D is a general
tool business operating in California.
xlvii)
On 15 March 2023, Sunbelt US acquired the business and assets of Equipment Rental Options Company, LLC. (‘ERO’). ERO is a
general tool business operating in Pennsylvania.
xlviii)
On 12 April 2023, Sunbelt US acquired the business and assets of R&R Group, LLC. (‘R&R’). R&R is a general tool business
operating in Washington.
xlix)
On 21 April 2023, Sunbelt US acquired the business and assets of Advantage Tool Rental, Inc. (‘Advantage’). Advantage is a
general tool business operating in Indiana.
l)
On 26 April 2023, Sunbelt US acquired the business and assets of Elms Equipment Rental, Inc. and an affiliated company,
Quintet Leasing, Inc. (together ‘Elms’). Elms is a general tool business operating in California.
Ashtead Group plc Annual Report & Accounts 2023
164
Notes to the consolidated financial statements continued
The following table sets out the fair value of the identifiable assets and liabilities acquired by the Group. The fair values have been
determined provisionally at the balance sheet date.
Fair value
to the Group
$m
Net assets acquired
Trade and other receivables 54.1
Inventory 9.0
Property, plant and equipment
– rental equipment 410.8
– other assets 45.3
Right-of-use asset 151.5
Creditors (39.4)
Current tax (2.6)
Deferred tax (42.0)
Debt (77.9)
Lease liabilities (150.0)
Intangible assets (non-compete agreements and customer relationships) 170.6
529.4
Consideration:
– cash paid and due to be paid (net of cash acquired) 1,067.6
– contingent consideration 35.8
1,103.4
Goodwill 574.0
The goodwill arising can be attributed to the key management personnel and workforce of the acquired businesses, the benefits
through advancing our clusters and leveraging cross-selling opportunities, and the synergies and other benefits the Group expects to
derive from the acquisitions. The synergies and other benefits include elimination of duplicate costs, improving utilisation of the
acquired rental fleet, using the Group’s financial strength to invest in the acquired business and drive improved returns through a
semi-fixed cost base and the application of the Group’s proprietary software to optimise revenue opportunities. $310m of the goodwill
is expected to be deductible for income tax purposes.
The gross value and the fair value of trade receivables at acquisition was $54m.
Due to the operational integration of acquired businesses with Sunbelt US, Sunbelt Canada and Sunbelt UK post acquisition, in
particular due to the merger of some stores, the movement of rental equipment between stores and investment in the rental fleet, it is
not practical to report the revenue and profit of the acquired businesses post-acquisition.
The revenue and operating profit of these acquisitions from 1 May 2022 to their date of acquisition was not material.
28 Contingent liabilities
Following its state aid investigation, in April 2019 the European Commission announced its decision that the Group Financing
Exemption in the UK controlled foreign company (‘CFC’) legislation constitutes state aid in some circumstances. In common with the
UK Government and other UK-based international companies, the Group does not agree with the decision and has therefore lodged a
formal appeal with the General Court of the European Union. In common with other UK taxpayers, the Group’s appeal has been stayed
while the appeals put forward by the UK Government and ITV plc proceed.
On 8 June 2022 the General Court of the European Union dismissed the appeals put forward by the UK Government and ITV plc.
However, there remains a high degree of uncertainty in the final outcome given the UK Government and ITV plc have both appealed
against the decision to the EU Court of Justice. The Group continues to monitor proceedings closely.
Despite the UK Government appealing the European Commission’s decision, Her Majesty’s Revenue & Customs (‘HMRC’) was required
to make an assessment of the tax liability which would arise if the decision is not successfully appealed and collect that amount from
taxpayers. HMRC issued a charging notice stating that the tax liability it believes to be due on this basis is £36m, including interest
payable. The Group has appealed the charging notice and has settled the amount assessed on it, including interest, in line with HMRC
requirements. On successful appeal in whole or in part, all or part of the amount paid in accordance with the charging notice would be
returned to the Group. The £36m ($45m at April 2023 exchange rates) paid has been recognised as a non-current asset on the balance
sheet. If either the decision reached by the General Court of the European Union or the charging notice issued by HMRC are not
ultimately appealed successfully, we have estimated the Group’s maximum potential liability to be £36m as at 30 April 2023 ($45m at
April 2023 exchange rates), including any interest payable. Based on the current status of proceedings, we have concluded that no
provision is required in relation to this matter.
Ashtead Group plc Annual Report & Accounts 2023
165
FINANCIAL STATEMENTS
28 Contingent liabilities (continued)
The Company
The Company has guaranteed the borrowings of its subsidiary undertakings under the Group’s senior secured credit and overdraft
facilities. At 30 April 2023 the amount borrowed under these facilities was $2,038m (2022: $2,108m). Subsidiary undertakings are also
able to obtain letters of credit under these facilities and, at 30 April 2023, letters of credit issued under these arrangements totalled
$73m (2022: $57m). In addition, the Company has guaranteed the 1.500%, 4.375%, 4.000%, 4.250%, 2.450%, 5.500% and 5.550% senior
notes issued by Ashtead Capital, Inc.
The Company has guaranteed lease commitments of subsidiary undertakings where the minimum lease commitment at 30 April 2023
totalled $34m (2022: $36m) in respect of land and buildings of which $6m is payable by subsidiary undertakings in the year ending
30 April 2024.
The Company has provided a guarantee to the Ashtead Group plc Retirement Benefits Plan (‘the plan’) that ensures the plan is at least
105% funded as calculated in accordance with Section 179 of the Pensions Act 2004. Based on the last actuarial valuation at 30 April
2022 the plan was 108% funded, so no value was attributable to the guarantee.
The Company has guaranteed the performance by subsidiaries of certain other obligations up to $6m (2022: $7m).
29 Events after the balance sheet date
Since the balance sheet date, the Group has completed four acquisitions for total purchase consideration of $237m, including acquired
debt of $34m, as follows:
i)
On 17 May 2023, Sunbelt US acquired the business and assets of Beattie Construction Services, LLC, (‘Beattie’). Beattie is a
specialty business operating in Michigan.
ii)
On 24 May 2023, Sunbelt US acquired the business and assets of Jones & Hollands, Inc. (‘Jones’). Jones is a general tool business
operating in Michigan.
iii)
On 24 May 2023, Sunbelt US acquired the business and assets of West Coast Equipment, LLC. (‘West Coast’). West Coast is a
general tool business operating in California.
iv)
On 1 June 2023, Sunbelt Canada acquired the entire share capital of Loue Froid, Inc. (‘Loue Froid’). Loue Froid is a specialty
business operating in Quebec.
The initial accounting for these acquisitions is incomplete given the proximity to the year end. Had these acquisitions taken place
on 1 May 2022, their contribution to revenue and operating profit would not have been material.
30 Related party transactions
The Group’s key management comprises the Company’s executive and non-executive directors. Details of their remuneration are given
in Note 4 and details of their share interests and share awards are given in the Directors’ remuneration report. In relation to the
Group’s defined benefit pension plan, details are included in Note 24.
31 Capital commitments
At 30 April 2023 capital commitments in respect of purchases of rental and other equipment totalled $1,392m (2022: $1,401m), all of
which had been ordered. There were no other material capital commitments at the year end.
32 Employees
The average number of employees, including directors, during the year was as follows:
2023
Number
2022
Number
United States 17,902 14,934
United Kingdom 4,262 3,947
Canada 1,879 1,575
24,043 20,456
Ashtead Group plc Annual Report & Accounts 2023
166
Notes to the consolidated financial statements continued
33 Parent company information
a) Balance sheet of the Company (Company number: 01807982)
Notes
2023
£m
2022
£m
Current assets
Prepayments and accrued income 1.2 1.3
Amounts due from subsidiary undertakings (f) 843.3 612.8
844.5 614.1
Non-current assets
Right-of-use assets (g) 4.7 5.4
Investments in Group companies (h) 363.7 363.7
Deferred tax asset 14.4 9.5
382.8 378.6
Total assets 1,227.3 992.7
Current liabilities
Accruals and deferred income 10.9 11.4
Lease liabilities (i) 0.8 0.8
11.7 12.2
Non-current liabilities
Lease liabilities (i) 4.1 4.8
Total liabilities 15.8 17.0
Equity
Share capital (b) 45.1 45.1
Share premium account (b) 3.6 3.6
Capital redemption reserve (b) 11.1 11.1
Own shares held by the Company (b) (574.1) (355.9)
Own shares held through the ESOT (b) (29.0) (34.0)
Retained reserves (b) 1,754.8 1,305.8
Equity attributable to equity holders of the Company 1,211.5 975.7
Total liabilities and equity 1,227.3 992.7
The Company reported a profit for the financial year ended 30 April 2023 of £733m (2022: £470m).
These financial statements were approved by the Board on 12 June 2023.
Brendan Horgan Michael Pratt
Chief executive Chief financial officer
Ashtead Group plc Annual Report & Accounts 2023
167
FINANCIAL STATEMENTS
33 Parent company information (continued)
b) Statement of changes in equity of the Company
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Own
shares
held by the
Company
£m
Own
shares
held
through
the ESOT
£m
Retained
reserves
£m
Total
£m
At 1 May 2021 45.1 3.6 11.1 (51.2) (28.8) 1,009.2 989.0
Profit for the year – – – – – 470.2 470.2
Other comprehensive income for the year – – – – – – –
Total comprehensive income for the year – – – – – 470.2 470.2
Dividends paid – – – – – (197.5) (197.5)
Own shares purchased by the ESOT – – – – (17.3) – (17.3)
Own shares purchased by the Company – – – (304.7) – – (304.7)
Share-based payments – – – – 12.1 23.4 35.5
Tax on share-based payments – – – – – 0.5 0.5
At 30 April 2022 45.1 3.6 11.1 (355.9) (34.0) 1,305.8 975.7
Profit for the year – – – – – 733.2 733.2
Other comprehensive income for the year – – – – – – –
Total comprehensive income for the year – – – – – 733.2 733.2
Dividends paid – – – – – (306.6) (306.6)
Own shares purchased by the ESOT – – – – (10.4) – (10.4)
Own shares purchased by the Company – – – (218.2) – – (218.2)
Share-based payments – – – – 15.4 22.0 37.4
Tax on share-based payments – – – – – 0.4 0.4
At 30 April 2023 45.1 3.6 11.1 (574.1) (29.0) 1,754.8 1,211.5
c) Cash flow statement of the Company
Note
2023
£m
2022
£m
Cash flows from operating activities
Cash from operations (k) (206.7) 41.9
Financing costs paid (4.6) (5.3)
Dividends received from Ashtead Holdings PLC 750.0 480.0
Net cash from operating activities 538.7 516.6
Cash flows from financing activities
Repayment of principal under lease liabilities (0.6) (0.6)
Purchase of own shares by the ESOT (10.4) (17.3)
Purchase of own shares by the Company (221.1) (301.2)
Dividends paid (306.6) (197.5)
Net cash used in financing activities (538.7) (516.6)
Change in cash and cash equivalents – –
Ashtead Group plc Annual Report & Accounts 2023
168
Notes to the consolidated financial statements continued
d) Accounting policies
The Company financial statements have been prepared on the basis of the accounting policies set out in Note 2 above, supplemented by
the policy on investments set out below.
The Company financial statements are presented in pounds sterling, the functional currency of the Company. Investments in
subsidiary undertakings are stated at cost less any necessary provision for impairment in the parent company balance sheet.
e) Income statement
Ashtead Group plc has not presented its own profit and loss account as permitted by section 408 of the Companies Act 2006. The profit
attributable to the Company is disclosed in the footnote to the Company’s balance sheet. There were no other amounts of
comprehensive income in the financial year.
The average number of employees, including directors, during the year was as follows:
2023
Number
2022
Number
Employees 20 19
Their aggregate remuneration comprised:
2023
£m
2022
£m
Salaries 15.5 13.2
Social security costs 1.5 1.7
Other pension costs 0.3 0.3
17.3 15.2
Staff costs include key management personnel. For more information on key management personnel remuneration see page 144.
f) Amounts due from subsidiary undertakings
2023
£m
2022
£m
Due within one year:
Ashtead Holdings PLC 843.3 612.8
The amounts due from subsidiary undertakings are considered to be Stage 1 under the general expected credit losses model and any
expected credit losses are immaterial.
g) Right-of-use asset
Property
leases
£m
Cost or valuation
At 1 May 2021, 30 April 2022 and 30 April 2023 7.5
Depreciation
At 1 May 2021 1.4
Charge for the period 0.7
At 30 April 2022 2.1
Charge for the period 0.7
At 30 April 2023 2.8
Net book value
At 30 April 2023 4.7
At 30 April 2022 5.4
Ashtead Group plc Annual Report & Accounts 2023
169
FINANCIAL STATEMENTS
33 Parent company information (continued)
h) Investments
Shares in Group companies
2023
£m
2022
£m
At 30 April 363.7 363.7
Details of the Company’s investments at 30 April 2023 are as follows:
Name Address of registered office Principal activity
USA
Ashtead US Holdings, Inc. The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Investment holding company
Ashtead Holdings, LLC The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Investment holding company
Sunbelt Rentals, Inc.
CT Corporation System, 160 Mine Lake Ct., Ste. 200,
Raleigh, NC 27615-6417
Equipment rental and related services
Sunbelt Rentals Industrial Services LLC The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Equipment rental and related services
Sunbelt Rentals Scaffold Services, Inc. CT Corporation System, 160 Mine Lake Ct., Ste. 200,
Raleigh, NC 27615-6417
Equipment rental and related services
Sunbelt Rentals Scaffold Services, LLC CT Corporation System, 3867 Plaza Tower Dr., East
Baton Rouge Parish, Baton Rouge, LA 70816
Equipment rental and related services
Pride Corporation CT Corporation System, 28 Liberty Street, New York,
NY 10005
Equipment rental and related services
Ashtead Capital, Inc. The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Finance company
Studio City Rentals (USA) Inc. 21500 Nordhoff St., Unit B, Chatsworth, CA 91311
Dormant
Sunbelt Rentals Exchange, Inc. The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Dormant
Colt Rentals LLC
1
The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Investment holding company
Colt Sunbelt Rentals LLC
2
The Corporation Trust Company, 1209 Orange St.,
Wilmington, DE 19801
Equipment rental and related services
UK
Ashtead Holdings PLC 100 Cheapside, London, EC2V 6DT Investment holding company
Sunbelt Rentals Limited 100 Cheapside, London, EC2V 6DT Equipment rental and related services
Ashtead Financing Limited 100 Cheapside, London, EC2V 6DT Finance company
Accession Group Limited 100 Cheapside, London, EC2V 6DT Dormant
Accession Holdings Limited 100 Cheapside, London, EC2V 6DT Dormant
Anglia Traffic Management Group Limited 100 Cheapside, London, EC2V 6DT Dormant
Ashtead Canada Limited 100 Cheapside, London, EC2V 6DT Dormant
Astra Site Services Limited 12 Hope Street, Edinburgh, Scotland, EH2 4DB Dormant
ATM Traffic Solutions Limited 100 Cheapside, London, EC2V 6DT Dormant
Eve Trakway Limited 100 Cheapside, London, EC2V 6DT Dormant
Hoist It Limited 100 Cheapside, London, EC2V 6DT Dormant
Opti-cal Survey Equipment Limited 100 Cheapside, London, EC2V 6DT Dormant
Plantfinder (Scotland) Limited 12 Hope Street, Edinburgh, Scotland, EH2 4DB Dormant
Precision Geomatics Limited 100 Cheapside, London, EC2V 6DT Dormant
Ellerbeck Industries Limited 100 Cheapside, London, EC2V 6DT Dormant
Inlec UK Limited 100 Cheapside, London, EC2V 6DT Dormant
Ashtead Plant Hire Company Limited 100 Cheapside, London, EC2V 6DT Dormant
Alpha Grip (Cardiff) Limited 100 Cheapside, London, EC2V 6DT Dormant
Alpha Grip (UK) Limited 100 Cheapside, London, EC2V 6DT Dormant
Media Access Solutions (MAS) Limited 100 Cheapside, London, EC2V 6DT Dormant
Movietech Camera Rentals Limited 100 Cheapside, London, EC2V 6DT Dormant
Movietech Cymru Limited 100 Cheapside, London, EC2V 6DT Dormant
Optimum Power Services Limited 100 Cheapside, London, EC2V 6DT Dormant
PKE Lighting Holdings Limited 100 Cheapside, London, EC2V 6DT Dormant
Ashtead Group plc Annual Report & Accounts 2023
170
Notes to the consolidated financial statements continued
Name Address of registered office Principal activity
PKE Lighting Limited 100 Cheapside, London, EC2V 6DT Dormant
Canada
Sunbelt Rentals of Canada Inc.
777 Dunsmuir Street, 11th Floor,
Vancouver, BC V7Y1K3
Equipment rental and related services
William F. White International Inc. 777 Dunsmuir Street, 11th Floor,
Vancouver, BC V7Y1K3
Equipment rental and related services
Modu-Loc GP Corp
3
777 Dunsmuir Street, 11th Floor,
Vancouver, BC V7Y1K3
Investment holding company
Modu-Loc Fence Rentals LP
3
777 Dunsmuir Street, 11th Floor,
Vancouver, BC V7Y1K3
Equipment rental and related services
Republic of Ireland
Ashtead Financing (Ireland)
Unlimited Company
10 Earlsfort Terrace, Dublin 2, D02 T380 Dormant
Sunbelt Rentals (Ireland) Limited 10 Earlsfort Terrace, Dublin 2, D02 T380 Equipment rental and related services
Germany
Sunbelt Rentals GmbH
Felix-Wankel-Straße 10, 74632 Neuenstein Equipment rental and related services
France
Sunbelt Rentals SAS 5 Avenue Carnot, 91330 Massy Equipment rental and related services
Bahamas
Sunbelt Rentals of the Bahamas, Inc. Ocean Centre, Montagu Foreshore,
East Bay Street, P.O. Box SS-19084,
Nassau, Bahamas
Dormant
1 The Company has a 40% ownership interest in Colt Rentals LLC.
2
The Company has a 70% ownership interest in Colt Sunbelt Rentals LLC.
3
Modu-Loc GP and Modu-Loc Fence Rentals LP merged with Sunbelt Rentals of Canada Inc. on 1 May 2023.
The issued share capital (all of which comprises ordinary shares) of subsidiaries is 100% owned by the Company or by subsidiary
undertakings and all subsidiaries are consolidated, unless otherwise specified.
i) Lease liabilities
(i) Amounts recognised in the balance sheet
2023
£m
2022
£m
Maturity analysis – undiscounted cash flows:
Less than one year 0.8 0.8
One to five years 3.2 3.2
More than five years 1.5 2.3
Total undiscounted lease liabilities at 30 April 5.5 6.3
Impact of discounting (0.6) (0.7)
Lease liabilities included in the balance sheet 4.9 5.6
Included in current liabilities 0.8 0.8
Included in non-current liabilities 4.1 4.8
4.9 5.6
(ii) Amounts recognised in the income statement
2023
£m
2022
£m
Depreciation of right-of-use assets 0.7 0.7
Interest on lease liabilities 0.2 0.2
0.9 0.9
(iii) Amounts recognised in the statement of cash flows
2023
£m
2022
£m
Financing costs paid in relation to lease liabilities 0.2 0.2
Repayment of principal under lease liabilities 0.6 0.7
Total cash outflow for leases 0.8 0.9
Ashtead Group plc Annual Report & Accounts 2023
171
FINANCIAL STATEMENTS
j) Financial instruments
The book value and fair value of the Company’s financial instruments are not materially different.
k) Notes to the Company cash flow statement
Cash flow from operating activities
2023
£m
2022
£m
Operating loss (16.5) (12.9)
Depreciation 0.8 0.8
EBITDA (15.7) (12.1)
Decrease/(increase) in prepayments and accrued income 0.1 (0.3)
Increase in accruals and deferred income 2.0 1.5
(Increase)/decrease in intercompany receivable (198.9) 47.6
Other non-cash movement 5.8 5.2
Net cash (outflow)/inflow from operations before exceptional items (206.7) 41.9
33 Parent company information (continued)
Ashtead Group plc Annual Report & Accounts 2023
172
Notes to the consolidated financial statements continued
In $m 2023 2022 2021 2020 2019
1
2018
1
2017
1
2016
1
2015
1
2014
1
Income statement
Revenue 9,667.3 7,962.3 6,638.6 6,398.9 5,869.7 4,959.1 4,125.0 3,824.7 3,258.4 2,618.6
Operating costs + (5,255.5) (4,352.9) (3,601.8) (3,390.7) (3,121.7) (2,640.1) (2,177.7) (2,055.4) (1,806.7) (1,521.1)
EBITDA + 4,411.8 3,609.4 3,036.8 3,008.2 2,748.0 2,319.0 1,947.3 1,769.3 1,451.7 1,097.5
Depreciation + (1,772.1) (1,553.0) (1,457.6) (1,380.8) (1,099.7) (930.7) (785.5) (675.2) (561.7) (442.0)
Operating profit + 2,639.7 2,056.4 1,579.2 1,627.4 1,648.3 1,388.3 1,161.8 1,094.1 890.0 655.5
Interest + (366.2) (232.6) (262.9) (284.2) (200.1) (147.5) (134.8) (124.6) (107.5) (75.5)
Pre-tax profit + 2,273.5 1,823.8 1,316.3 1,343.2 1,448.2 1,240.8 1,027.0 969.5 782.5 580.0
Operating profit 2,522.0 1,947.8 1,498.0 1,549.3 1,582.2 1,330.2 1,125.1 1,051.1 864.7 646.8
Pre-tax profit 2,155.8 1,668.1 1,235.1 1,244.0 1,382.1 1,154.5 990.3 926.5 757.1 571.4
Cash flow
Cash flow from operations
before exceptional items
and changes in rental fleet 4,073.6 3,406.5 3,017.0 3,076.2 2,664.4 2,248.0 1,889.3 1,617.5 1,347.1 1,029.5
Free cash flow 531.5 1,125.4 1,822.2 1,001.5 480.4 516.6 4 33.1 (93.3) (138.7) (85.7)
Balance sheet
Capital expenditure 3,772.1 2,397.3 947.4 1,877.8 2,070.5 1,657.5 1,405.2 1,863.0 1,698.8 1,186.4
Book cost of rental equipment 15,825.6 13,538.8 11,854.9 11,868.2 10,796.9 9,046.5 7,564.0 6,564.4 5,591.1 4,349.6
Shareholders’ funds 6,008.0 5,033.7 4,525.2 3,748.7 3,650.8 3,4 81.1 2,549.0 2,168.7 1,708.2 1,392.2
In cents
Dividend per share 100.0¢ 80.0¢ 58.0¢ 52.91¢ 49.81¢ 43.59¢ 36.88¢ 30.37¢ 23.15¢ 18.76¢
Earnings per share 368.4¢ 280.9¢ 205.4¢ 205.2¢ 216.7¢ 262.5¢ 130.0¢ 122.1¢ 96.7¢ 74.0¢
Adjusted earnings per share 388.5¢ 307.1¢ 219.1¢ 221.5¢ 227.2¢ 170.6¢ 135.0¢ 127.8¢ 100.1¢ 74.6¢
In percent
EBITDA margin + 45.6% 45.3% 45.7% 47.0% 46.8% 46.8% 47.2% 46.3% 44.6% 41.9%
Operating profit margin + 27.3% 25.8% 23.8% 25.4% 28.1% 28.0% 28.2% 28.6% 27.3% 25.0%
Pre-tax profit margin + 23.5% 22.9% 19.8% 21.0% 24.7% 25.0% 24.9% 25.3% 24.0% 22.2%
Return on investment + 19.2% 18.2% 14.9% 15.2% 17.8% 17.6% 17.3% 18.9% 19.4% 18.6%
People
Employees at year end 25,347 21,752 18,826 19,284 17,80 3 15,996 14,220 13,106 11,928 9,934
Locations
Stores at year end 1,398 1,233 1,126 1,105 1,036 899 808 715 640 556
Notes
+
Before exceptional items, amortisation and fair value remeasurements.
1
The Group elected to apply IFRS 16 using the modified retrospective approach with no restatement of comparative figures. As a result, the results for 2014 to 2019 are not
comparable directly to the later years with the adoption of IFRS 16 resulting in higher EBITDA and operating profit but lower profit before exceptional items, amortisation
and tax than under the previous accounting standard.
Ashtead Group plc Annual Report & Accounts 2023
173
ADDITIONAL INFORMATION
TEN-YEAR HISTORY
The glossary of terms below sets out definitions of terms used throughout this Annual Report & Accounts. Included are a number of
alternative performance measures (‘APMs’) which the directors have adopted in order to provide additional useful information on the
underlying trends, performance and position of the Group. The directors use these measures, which are common across the industry,
for planning and reporting purposes. These measures are also used in discussions with the investment analyst community and credit
rating agencies. Where relevant, the APMs exclude the impact of IFRS 16 to aid comparability with prior year metrics. The APMs are
not defined by IFRS and therefore may not be directly comparable with other companies’ APMs and should not be considered superior
to or a substitute for IFRS measures.
Term
Closest equivalent
statutory measure Definition and purpose
Adjusted
results
See definition Adjusted results are the results stated before exceptional items and the amortisation of acquired
intangibles. Adjusted results are utilised by the Group in its remuneration targets. A reconciliation is
shown on the income statement on page 133.
Capital
expenditure
None Represents additions to rental equipment and other property, plant and equipment (excluding assets
acquired through a business combination).
Cash
conversion
ratio
None Represents cash flow from operations before changes in rental equipment as a percentage of EBITDA.
This measure is utilised to show the proportion of EBITDA converted into cash flow from operations
generated by the business before investment expenditures, interest and taxation.
2023 2022
EBITDA ($m) Note 26(a)
4,412
3,609
Cash inflow from operations before
changes in rental equipment ($m) Note 26(a) 4,074 3,406
Cash conversion ratio 92%
94%
Dollar
utilisation
None
Dollar utilisation is trailing 12-month rental revenue divided by average fleet at original (or ‘first’) cost
measured over a 12-month period. Dollar utilisation has been identified as one of the Group’s key
performance indicators. The components used to calculate this measure are shown within the
‘Financial review’.
Drop through
None Calculated as the change in rental revenue which converts into EBITDA (excluding gains from sale of new
equipment, merchandise and consumables and used equipment).
2023
$m
2022
$m
Change
Sunbelt US
Rental revenue
7,503
6,042 1,461
EBITDA
3,955
3,121
Gains
(235)
(128)
EBITDA excluding gains
3,720
2,993 727
Drop through
50%
This measure is utilised by the Group to demonstrate the change in profitability generated by the
Group as a result of the change in rental revenue in the year.
EBITDA
Profit before tax EBITDA is not defined by IFRS but is a widely accepted profit measure being earnings before interest,
tax, depreciation and amortisation. A reconciliation of EBITDA to profit before tax is shown on the income
statement on page 133.
EBITDA margin
None EBITDA margin is calculated as EBITDA divided by revenue. Progression in EBITDA margin is an
important indicator of the Group’s performance and this has been identified as one of the Group’s key
performance indicators.
Exceptional
items
None Exceptional items are those items of income or expense which the directors believe should be disclosed
separately by virtue of their significant size or nature and limited predictive value to enable a better
understanding of the Group’s financial performance.
Excluding these items provides readers with helpful additional information on the performance of
the business across periods and against peer companies. It is also consistent with how business
performance is reported to the Board and the remuneration targets set by the Company. Details are
provided in Note 5 of the financial statements.
Ashtead Group plc Annual Report & Accounts 2023
174
GLOSSARY OF TERMS
Term
Closest equivalent
statutory measure Definition and purpose
Free cash flow
Net cash
generated
from operating
activities
Net cash generated from operating activities less non-rental net property, plant and equipment
expenditure. Non-rental net property, plant and equipment expenditure comprises payments for non-
rental capital expenditure less disposal proceeds received in relation to non-rental asset disposals.
2023
$m
2022
$m
Net cash generated from operating activities
1,000
1,499
Payments for non-rental property, plant and equipment
(510)
(399)
Proceeds from disposal of non-rental property, plant and equipment
41
25
Free cash flow 531
1,125
This measure shows the cash retained by the Group prior to discretionary expenditure on acquisitions
and returns to shareholders.
Growth at
constant
exchange rates
None
Calculated by applying the current period exchange rate to the comparative period result. The relevant
foreign currency exchange rates are provided within Note 2, Accounting policies, to the financial
statements. This measure is used as a means of eliminating the effects of foreign exchange rate
movements on the period-on-period changes in reported results.
2023
$m
2022
$m %
Rental revenue
As reported 8,698 7,235 20%
Retranslation effect – (112)
At constant currency 8,698 7,12 3 22%
Adjusted profit before tax
As reported 2,273 1,824 25%
Retranslation effect – (14)
At constant currency 2,273 1,810 26%
Leverage
None Leverage calculated at constant exchange rates uses the period end exchange rate for the relevant
period and is determined as net debt divided by EBITDA.
2023 2022
Excluding
IFRS 16
Including
IFRS 16
Excluding
IFRS 16
Including
IFRS 16
Net debt ($m)
As reported and at constant currency
6,588 8,960 5,179 7,160
EBITDA ($m)
As reported
4,203 4,412 3,430 3,609
Retranslation effect 4 4 (23) (24)
At constant currency 4,207 4,416 3,407 3,585
Leverage
As reported
1.6 2.0 1.5 2.0
At constant currency 1.6 2.0 1.5 2.0
This measure is used to provide an indication of the strength of the Group’s balance sheet and is widely
used by investors and credit rating agencies. It also forms part of the remuneration targets of the Group
and has been identified as one of the Group’s key performance indicators.
Net debt
None
Net debt is total borrowings (bank, bonds) and lease liabilities less cash balances, as reported. This
measure is used to provide an indication of the Group’s overall level of indebtedness and is widely used
by investors and credit rating agencies. It has been identified as one of the Group’s key performance
indicators. An analysis of net debt is provided in Note 26(c) of the financial statements.
Operating
profit
Profit before
tax
Operating profit is earnings before interest and tax. A reconciliation of operating profit to profit before tax
is shown on the income statement on page 133.
Operating
profit margin
None
Operating profit margin is calculated as operating profit divided by revenue. Progression in operating
profit margin is an important indicator of the Group’s performance.
Ashtead Group plc Annual Report & Accounts 2023
175
ADDITIONAL INFORMATION
Term
Closest equivalent
statutory measure Definition and purpose
Organic
measures
See definition
Organic measures are used to explain the financial and operational performance of Sunbelt US and
comprise all locations, excluding locations arising from a bolt-on acquisition completed after the start of
the comparative financial period.
Return on
Investment
(‘RoI’)
None Last 12-month (‘LTM’) adjusted operating profit divided by the last 12-month average of the sum of
net tangible and intangible fixed assets, plus net working capital but excluding net debt and tax. RoI is
calculated excluding the impact of IFRS 16.
RoI is used by management to help inform capital allocation decisions within the business and has been
identified as one of the Group’s key performance indicators. It also forms part of the remuneration
targets of the Group. The impact of IFRS 16 has been excluded so as to reflect the way the business is
managed.
A reconciliation of Group RoI is provided below:
2023 2022
Adjusted operating profit ($m) 2,640 2,056
IFRS 16 impact ($m) (40) (28)
Adjusted operating profit (excluding IFRS 16) ($m) 2,600 2,028
Average net assets ($m) 13,565 11,119
Return on investment 19% 18%
RoI for the businesses is calculated in the same way, but excludes goodwill and intangible assets:
US
$m
Canada
C$m
UK
£m
Adjusted operating profit 2,432 160 64
Average net assets, excluding goodwill and intangibles 8,910 884 720
Return on investment 27% 18% 9%
Other terms used within this Annual Report & Accounts include:
− Availability: represents the headroom on a given date under the terms of our $4.5bn asset-backed senior bank facility, taking
account of current borrowings.
− Fleet age: net book value weighted age of serialised rental assets. Serialised rental assets constitute the substantial majority of
ourfleet.
− Fleet on rent: quantity measured at original cost of our rental fleet on rent. Fleet on rent has been identified as one of the Group’s
key performance indicators.
− Rental only revenue: rental revenue excluding loss damage waiver, environmental fees, erection and dismantling revenue and
revenue from rental equipment delivery and collection.
− RIDDOR rate: the RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) reportable rate is the number
of major injuries or over seven-day injuries per 100,000 hours worked.
− Same-store: same-stores are those locations which were open at the start of the comparative financial period.
− Segment profit: operating profit before amortisation and exceptional items by segment.
− Staff turnover: staff turnover is calculated as the number of leavers in a year (excluding redundancies) divided by the average
headcount during the year.
− Suppressed availability: represents the amount on a given date that the asset base exceeds the facility size under the terms of our
$4.5bn asset-backed senior bank facility.
− TRIR rate: reportable incidents in North America are reported in accordance with the OSHA (Occupational, Safety and Health
Administration) framework as a Total Recordable Incident Rate (‘TRIR’).
Ashtead Group plc Annual Report & Accounts 2023
176
Glossary of terms continued
Future dates
Quarter 1 results 5 September 2023
2023 Annual General Meeting 6 September 2023
Quarter 2 results 5 December 2023
Quarter 3 results 12 March 2024
Quarter 4 and year-end results 18 June 2024
Advisers
Auditor
Deloitte LLP
Statutory Auditor
1 New Street Square
London
EC4A 3HQ
United Kingdom
Registrars and Transfer Office
Equiniti
PO Box 4630
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6QQ
Financial PR Advisers
H/Advisors Maitland
3 Pancras Square
London
N1C 4AG
Solicitors
Slaughter and May
One Bunhill Row
London
EC1Y 8YY
Skadden, Arps, Slate, Meagher & Flom LLP
155 N Wacker Drive
Chicago, IL 60606
Parker, Poe, Adams & Bernstein LLP
401 South Tryon Street
Charlotte, NC 28202
Brokers
Barclays Bank plc
North Colonnade
Canary Wharf
London
E14 4BB
Citigroup Global Markets Limited
Citigroup Centre
33 Canada Square
London
E14 5LB
Registered number
01807982
Registered Office
100 Cheapside
London
EC2V 6DT
Ashtead Group plc
100 Cheapside
London EC2V 6DT
Phone: + 44 (0) 20 7726 9700
www.ashtead-group.com
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